Natura Cosméticos S.A. (BVMF:NATU3) insiders, who hold 36% of the firm would be disappointed by the recent pullback

Explore Natura Cosméticos's Fair Values from the Community and select yours

Key Insights

• Significant insider control over Natura Cosméticos implies vested interests in company growth
• A total of 10 investors have a majority stake in the company with 51% ownership
• Institutions own 35% of Natura Cosméticos

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To get a sense of who is truly in control of Natura Cosméticos S.A. (BVMF:NATU3), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 36% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 4.6% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Natura Cosméticos.

View our latest analysis for Natura Cosméticos

What Does The Institutional Ownership Tell Us About Natura Cosméticos?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Natura Cosméticos. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Natura Cosméticos' historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 5.1% of Natura Cosméticos. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Baillie Gifford & Co. is the largest shareholder with 10% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.4% and 5.2%, of the shares outstanding, respectively.

We did some more digging and found that 10 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Natura Cosméticos

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in Natura Cosméticos S.A.. It has a market capitalization of just R$12b, and insiders have R$4.4b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 23% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Natura Cosméticos better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Natura Cosméticos you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.