Stock Analysis

Companhia de Saneamento de Minas Gerais' (BVMF:CSMG3) market cap surged R$337m last week, state or government who have a lot riding on the company were rewarded

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Key Insights

Every investor in Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are state or government with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, state or government collectively scored the highest last week as the company hit R$6.1b market cap following a 5.9% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Companhia de Saneamento de Minas Gerais.

See our latest analysis for Companhia de Saneamento de Minas Gerais

BOVESPA:CSMG3 Ownership Breakdown March 15th 2023

What Does The Institutional Ownership Tell Us About Companhia de Saneamento de Minas Gerais?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Companhia de Saneamento de Minas Gerais. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Companhia de Saneamento de Minas Gerais, (below). Of course, keep in mind that there are other factors to consider, too.

BOVESPA:CSMG3 Earnings and Revenue Growth March 15th 2023

Hedge funds don't have many shares in Companhia de Saneamento de Minas Gerais. State of Minas Gerais, Brazil. is currently the largest shareholder, with 50% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 5.0% of the shares outstanding, followed by an ownership of 3.1% by the third-largest shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Companhia de Saneamento de Minas Gerais

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 data cannot confirm that board members are holding shares personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Companhia de Saneamento de Minas Gerais. 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 Companhia de Saneamento de Minas Gerais better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Companhia de Saneamento de Minas Gerais , and understanding them should be part of your investment process.

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.

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