Institutions profited after Localiza Rent a Car S.A.'s (BVMF:RENT3) market cap rose R$3.0b last week but retail investors profited the most

Key Insights

• Localiza Rent a Car's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 25 investors have a majority stake in the company with 43% ownership
• Insider ownership in Localiza Rent a Car is 19%

To get a sense of who is truly in control of Localiza Rent a Car S.A. (BVMF:RENT3), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 41% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that reaped the most benefits after last week’s 6.5% price gain, institutions also received a 40% cut.

Let's delve deeper into each type of owner of Localiza Rent a Car, beginning with the chart below.

View our latest analysis for Localiza Rent a Car

What Does The Institutional Ownership Tell Us About Localiza Rent a Car?

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.

Localiza Rent a Car 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. 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 Localiza Rent a Car's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Localiza Rent a Car. Our data shows that BlackRock, Inc. is the largest shareholder with 5.2% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.0% and 3.9%, of the shares outstanding, respectively. Eugenio Mattar, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

A deeper look at our ownership data shows that the top 25 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Localiza Rent a Car

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in Localiza Rent a Car S.A.. It is very interesting to see that insiders have a meaningful R$9.5b stake in this R$49b business. 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

The general public, who are usually individual investors, hold a 41% stake in Localiza Rent a Car. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Localiza Rent a Car better, we need to consider many other factors. Be aware that Localiza Rent a Car is showing 4 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com