Companhia de Saneamento Básico do Estado de São Paulo - SABESP (BVMF:SBSP3) is favoured by institutional owners who hold 42% of the company

Key Insights

• Given the large stake in the stock by institutions, Companhia de Saneamento Básico do Estado de São Paulo - SABESP's stock price might be vulnerable to their trading decisions
• 51% of the business is held by the top 9 shareholders
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

To get a sense of who is truly in control of Companhia de Saneamento Básico do Estado de São Paulo - SABESP (BVMF:SBSP3), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let's delve deeper into each type of owner of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, beginning with the chart below.

See our latest analysis for Companhia de Saneamento Básico do Estado de São Paulo - SABESP

What Does The Institutional Ownership Tell Us About Companhia de Saneamento Básico do Estado de São Paulo - SABESP?

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.

Companhia de Saneamento Básico do Estado de São Paulo - SABESP 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 Companhia de Saneamento Básico do Estado de São Paulo - SABESP'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 Companhia de Saneamento Básico do Estado de São Paulo - SABESP. Our data shows that Government of the State of Sao Paulo is the largest shareholder with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 5.7%, of the shares outstanding, respectively.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Companhia de Saneamento Básico do Estado de São Paulo - SABESP

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Companhia de Saneamento Básico do Estado de São Paulo - SABESP. 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.

Public Company Ownership

Public companies currently own 15% of Companhia de Saneamento Básico do Estado de São Paulo - SABESP stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. To that end, you should learn about the 2 warning signs we've spotted with Companhia de Saneamento Básico do Estado de São Paulo - SABESP (including 1 which doesn't sit too well with us) .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.