Dotz S.A.'s (BVMF:DOTZ3) biggest owners are private equity firms who got richer after stock soared 760% last week

Key Insights

• The considerable ownership by private equity firms in Dotz indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Ascet Investimentos Ltda. with a 68% stake
• 10% of Dotz is held by Institutions

To get a sense of who is truly in control of Dotz S.A. (BVMF:DOTZ3), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 74% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private equity firms benefitted the most after the company's market cap rose by R$989m last week.

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

See our latest analysis for Dotz

What Does The Institutional Ownership Tell Us About Dotz?

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 Dotz 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 Dotz's historic earnings and revenue below, but keep in mind there's always more to the story.

Dotz is not owned by hedge funds. Ascet Investimentos Ltda. is currently the company's largest shareholder with 68% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 7.7% and 5.8% of the shares outstanding respectively, Planner Trustee DTVM Ltda and SBLA Advisers Corp. are the second and third largest shareholders.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Dotz

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in Dotz. 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.

Private Equity Ownership

With a stake of 74%, private equity firms could influence the Dotz board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Dotz is showing 2 warning signs in our investment analysis , you should know about...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.