Locaweb Serviços de Internet S.A. (BVMF:LWSA3) institutional owners may be pleased with recent gains after 38% loss over the past year

Key Insights

• Given the large stake in the stock by institutions, Locaweb Serviços de Internet's stock price might be vulnerable to their trading decisions
• The top 6 shareholders own 51% of the company
• 31% of Locaweb Serviços de Internet is held by insiders

Every investor in Locaweb Serviços de Internet S.A. (BVMF:LWSA3) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 31% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors would appreciate the 10% increase in share price last week, given their one-year losses have totalled a disappointing 38%.

In the chart below, we zoom in on the different ownership groups of Locaweb Serviços de Internet.

Check out our latest analysis for Locaweb Serviços de Internet

What Does The Institutional Ownership Tell Us About Locaweb Serviços de Internet?

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 Locaweb Serviços de Internet does have institutional investors; and they hold a good portion of the company's stock. 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 Locaweb Serviços de Internet, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Locaweb Serviços de Internet. General Atlantic Service Company, L.P. is currently the company's largest shareholder with 17% of shares outstanding. The second and third largest shareholders are Gilberto Mautner and Claudio Gora, with an equal amount of shares to their name at 7.0%. Two of the top three shareholders happen to be Top Key Executive and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Locaweb Serviços de Internet

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in Locaweb Serviços de Internet S.A.. Insiders own R$545m worth of shares in the R$1.8b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Locaweb Serviços de Internet. 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 Equity Ownership

Private equity firms hold a 17% stake in Locaweb Serviços de Internet. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Locaweb Serviços de Internet , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.