Recent uptick might appease Localiza Rent a Car S.A. (BVMF:RENT3) institutional owners after losing 20% over the past year

Key Insights

• Significantly high institutional ownership implies Localiza Rent a Car's stock price is sensitive to their trading actions
• The top 25 shareholders own 45% of the company
• 19% of Localiza Rent a Car is held by insiders

If you want to know who really controls Localiza Rent a Car S.A. (BVMF:RENT3), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week's R$3.3b market cap gain would probably be appreciated by institutional investors, especially after a year of 20% losses.

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

See our latest analysis for Localiza Rent a Car

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

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.

As you can see, institutional investors have a fair amount of stake in Localiza Rent a Car. 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 Localiza Rent a Car's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Localiza Rent a Car. The company's largest shareholder is BlackRock, Inc., with ownership of 4.9%. In comparison, the second and third largest shareholders hold about 4.0% and 3.9% of the stock. Eugenio Mattar, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Localiza Rent a Car

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.

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 maintain a significant holding in Localiza Rent a Car S.A.. It is very interesting to see that insiders have a meaningful R$8.7b stake in this R$45b 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-- including retail investors -- own 38% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For instance, we've identified 3 warning signs for Localiza Rent a Car (1 shouldn't be ignored) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

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

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.