Dexco S.A.'s (BVMF:DXCO3) market cap dropped R$300m last week; individual investors who hold 38% were hit as were institutions

Key Insights

• Significant control over Dexco by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 55% of the company
• 13% of Dexco is held by insiders

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If you want to know who really controls Dexco S.A. (BVMF:DXCO3), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are public companies with 38% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 28% shares weren’t spared from last week’s R$300m market cap drop, public companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Dexco.

View our latest analysis for Dexco

What Does The Institutional Ownership Tell Us About Dexco?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Dexco already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Dexco, (below). Of course, keep in mind that there are other factors to consider, too.

Dexco is not owned by hedge funds. Itaúsa S.A. is currently the largest shareholder, with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 10% and 7.3%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Dexco

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own a reasonable proportion of Dexco S.A.. Insiders have a R$566m stake in this R$4.4b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Dexco. 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.

Public Company Ownership

It appears to us that public companies own 38% of Dexco. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Dexco (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.