Institutions profited after Empresa Nacional de Telecomunicaciones S.A.'s (SNSE:ENTEL) market cap rose CL$62b last week but public companies profited the most

Key Insights

• Empresa Nacional de Telecomunicaciones' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• Almendral S.A. owns 55% of the company
• 24% of Empresa Nacional de Telecomunicaciones is held by Institutions

Every investor in Empresa Nacional de Telecomunicaciones S.A. (SNSE:ENTEL) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 56% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While public companies were the group that reaped the most benefits after last week’s 7.0% price gain, institutions also received a 24% cut.

In the chart below, we zoom in on the different ownership groups of Empresa Nacional de Telecomunicaciones.

See our latest analysis for Empresa Nacional de Telecomunicaciones

What Does The Institutional Ownership Tell Us About Empresa Nacional de Telecomunicaciones?

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.

Empresa Nacional de Telecomunicaciones 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 Empresa Nacional de Telecomunicaciones' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Empresa Nacional de Telecomunicaciones. The company's largest shareholder is Almendral S.A., with ownership of 55%. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 3.5% of the shares outstanding, followed by an ownership of 2.8% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Empresa Nacional de Telecomunicaciones

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. 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. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. 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 56% of Empresa Nacional de Telecomunicaciones stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Empresa Nacional de Telecomunicaciones (at least 1 which is significant) , 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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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.