Could The São Carlos Empreendimentos e Participações S.A. (BVMF:SCAR3) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
January 25, 2022
BOVESPA:SCAR3
Source: Shutterstock

A look at the shareholders of São Carlos Empreendimentos e Participações S.A. (BVMF:SCAR3) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

São Carlos Empreendimentos e Participações is a smaller company with a market capitalization of R$2.2b, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about São Carlos Empreendimentos e Participações.

View our latest analysis for São Carlos Empreendimentos e Participações

ownership-breakdown
BOVESPA:SCAR3 Ownership Breakdown January 25th 2022

What Does The Institutional Ownership Tell Us About São Carlos Empreendimentos e Participações?

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.

São Carlos Empreendimentos e Participações already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 São Carlos Empreendimentos e Participações, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
BOVESPA:SCAR3 Earnings and Revenue Growth January 25th 2022

São Carlos Empreendimentos e Participações is not owned by hedge funds. The company's largest shareholder is J.P. Morgan Asset Management, Inc., with ownership of 17%. The second and third largest shareholders are Christian Van Hoegaerden Herrmann Telles and Marcel Telles, with an equal amount of shares to their name at 8.5%.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 São Carlos Empreendimentos e Participações

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.

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.

Our information suggests that insiders own more than half of São Carlos Empreendimentos e Participações S.A.. This gives them effective control of the company. That means they own R$1.2b worth of shares in the R$2.2b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over São Carlos Empreendimentos e Participações. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that São Carlos Empreendimentos e Participações is showing 4 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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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