Is Companhia de Saneamento Básico do Estado de São Paulo - SABESP (BVMF:SBSP3) Popular Amongst Institutions?

The big shareholder groups in Companhia de Saneamento Básico do Estado de São Paulo - SABESP (BVMF:SBSP3) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.

Companhia de Saneamento Básico do Estado de São Paulo - SABESP has a market capitalization of R$29b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. 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.

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?

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.

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 can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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. Looking at our data, we can see that the largest shareholder is Sao Paulo (State of) with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. BlackRock, Inc. is the second largest shareholder owning 2.9% of common stock, and Impax Asset Management Group plc holds about 2.0% of the company stock.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

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

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.

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.

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

The general public holds a 23% 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Companhia de Saneamento Básico do Estado de São Paulo - SABESP that you should be aware of before investing here.

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. 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.
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