Aguas Andinas S.A.'s (SNSE:AGUAS-A) stock price dropped 3.9% last week; public companies would not be happy

By
Simply Wall St
Published
February 22, 2022
SNSE:AGUAS-A
Source: Shutterstock

To get a sense of who is truly in control of Aguas Andinas S.A. (SNSE:AGUAS-A), it is important to understand the ownership structure of the business. With 50% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 3.9% decline in share price, public companies suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Aguas Andinas.

See our latest analysis for Aguas Andinas

ownership-breakdown
SNSE:AGUAS-A Ownership Breakdown February 22nd 2022

What Does The Institutional Ownership Tell Us About Aguas Andinas?

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.

Aguas Andinas 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 Aguas Andinas' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SNSE:AGUAS-A Earnings and Revenue Growth February 22nd 2022

We note that hedge funds don't have a meaningful investment in Aguas Andinas. Our data shows that Suez SA is the largest shareholder with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 5.0% and 1.9% of the 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. 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 Aguas Andinas

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.

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. 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 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Aguas Andinas. 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

It appears to us that public companies own 50% of Aguas Andinas. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Aguas Andinas (including 1 which is concerning) .

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.