Companhia de Saneamento de Minas Gerais' (BVMF:CSMG3) market cap surged R$565m last week, state or government who have a lot riding on the company were rewarded

Key Insights

• Significant control over Companhia de Saneamento de Minas Gerais by state or government implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is State of Minas Gerais, Brazil. with a 50% stake
• Institutional ownership in Companhia de Saneamento de Minas Gerais is 17%

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To get a sense of who is truly in control of Companhia de Saneamento de Minas Gerais (BVMF:CSMG3), it is important to understand the ownership structure of the business. 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 were the biggest beneficiaries of last week’s 7.2% gain.

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

View our latest analysis for Companhia de Saneamento de Minas Gerais

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. 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 Companhia de Saneamento de Minas Gerais' historic earnings and revenue below, but keep in mind there's always more to the story.

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. This implies that they have majority interest control of the future of the company. With 5.0% and 3.2% of the shares outstanding respectively, BlackRock, Inc. and Amundi Asset Management SAS are the second and third largest shareholders.

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

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.

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.

We note our data does not show any board members 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 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Companhia de Saneamento de Minas Gerais. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Companhia de Saneamento de Minas Gerais you should be aware of, and 1 of them can't be ignored.

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.