Magazine Luiza S.A.'s (BVMF:MGLU3) market cap dropped R$294m last week; individual investors who hold 50% were hit as were institutions

Key Insights

• The considerable ownership by private companies in Magazine Luiza indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 53% ownership
• Institutional ownership in Magazine Luiza is 25%

A look at the shareholders of Magazine Luiza S.A. (BVMF:MGLU3) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 4.1% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 25% stock also took a hit.

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

View our latest analysis for Magazine Luiza

What Does The Institutional Ownership Tell Us About Magazine Luiza?

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.

Magazine Luiza 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Magazine Luiza's earnings history below. Of course, the future is what really matters.

Magazine Luiza is not owned by hedge funds. The company's largest shareholder is LTD Administração e Participações S.A., with ownership of 47%. Meanwhile, the second and third largest shareholders, hold 5.8% and 5.2%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Magazine Luiza

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Magazine Luiza S.A.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around R$116m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Magazine Luiza. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 50%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Magazine Luiza better, we need to consider many other factors. Take risks for example - Magazine Luiza has 2 warning signs we think you should be aware of.

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.