Eternit S.A. (BVMF:ETER3) surges 10%; individual investors who own 52% shares profited along with institutions

Key Insights

• Eternit's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 14 investors have a majority stake in the company with 48% ownership
• Institutional ownership in Eternit is 43%

To get a sense of who is truly in control of Eternit S.A. (BVMF:ETER3), it is important to understand the ownership structure of the business. With 52% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 10% increase in the stock price last week, individual investors profited the most, but institutions who own 43% stock also stood to gain from the increase.

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

View our latest analysis for Eternit

What Does The Institutional Ownership Tell Us About Eternit?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Eternit does have institutional investors; and they hold a good portion of the company's stock. 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 Eternit's historic earnings and revenue below, but keep in mind there's always more to the story.

Eternit is not owned by hedge funds. Oliveira Trust Servicer S.A. is currently the company's largest shareholder with 26% of shares outstanding. With 8.1% and 5.0% of the shares outstanding respectively, Geração Futuro Corretora de Valores, Asset Management Arm and Luiz Filho are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 14 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Eternit

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Shareholders would probably be interested to learn that insiders own shares in Eternit S.A.. In their own names, insiders own R$26m worth of stock in the R$513m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 52% of Eternit. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Eternit that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.