How Much Of Sequoia Logística e Transportes S.A. (BVMF:SEQL3) Do Institutions Own?

By
Simply Wall St
Published
May 31, 2021
BOVESPA:SEQL3
Source: Shutterstock

If you want to know who really controls Sequoia Logística e Transportes S.A. (BVMF:SEQL3), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that have been privatized tend to have low insider ownership.

Sequoia Logística e Transportes is a smaller company with a market capitalization of R$3.2b, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Sequoia Logística e Transportes.

See our latest analysis for Sequoia Logística e Transportes

ownership-breakdown
BOVESPA:SEQL3 Ownership Breakdown June 1st 2021

What Does The Institutional Ownership Tell Us About Sequoia Logística e Transportes?

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 Sequoia Logística e Transportes. 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 Sequoia Logística e Transportes' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
BOVESPA:SEQL3 Earnings and Revenue Growth June 1st 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Sequoia Logística e Transportes is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Warburg Pincus LLC with 28% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Sequoia Logística e Transportes

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 data suggests that insiders own under 1% of Sequoia Logística e Transportes S.A. in their own names. It seems the board members have no more than R$15m worth of shares in the R$3.2b company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, with a 10% stake in the company, will not easily be ignored. 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.

Private Equity Ownership

Private equity firms hold a 28% stake in Sequoia Logística e Transportes. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sequoia Logística e Transportes better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Sequoia Logística e Transportes , and understanding them should be part of your investment process.

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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