Companhia de Saneamento Básico do Estado de São Paulo - SABESP's (BVMF:SBSP3) institutional investors lost 4.8% last week but have benefitted from longer-term gains

Key Insights

• Institutions' substantial holdings in Companhia de Saneamento Básico do Estado de São Paulo - SABESP implies that they have significant influence over the company's share price
• 51% of the business is held by the top 9 shareholders
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

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Every investor in Companhia de Saneamento Básico do Estado de São Paulo - SABESP (BVMF:SBSP3) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors was the group most impacted after the company's market cap fell to R$85b last week. However, the 45% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

Let's take a closer look to see what the different types of shareholders can tell us about Companhia de Saneamento Básico do Estado de São Paulo - SABESP.

View 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?

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 Básico do Estado de São Paulo - SABESP. 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.

Hedge funds don't have many shares in Companhia de Saneamento Básico do Estado de São Paulo - SABESP. Government of the State of Sao Paulo is currently the company's 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

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

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

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

The general public, who are usually individual investors, hold a 20% stake in Companhia de Saneamento Básico do Estado de São Paulo - SABESP. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

It appears to us that public companies own 15% of Companhia de Saneamento Básico do Estado de São Paulo - SABESP. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Companhia de Saneamento Básico do Estado de São Paulo - SABESP better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Companhia de Saneamento Básico do Estado de São Paulo - SABESP (at least 2 which are concerning) , 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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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.