Inversiones Aguas Metropolitanas S.A.'s (SNSE:IAM) stock price dropped 5.6% last week; public companies would not be happy

Key Insights

• Inversiones Aguas Metropolitanas' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the company is held by a single shareholder (Veolia Environnement SA)
• Institutional ownership in Inversiones Aguas Metropolitanas is 12%

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Every investor in Inversiones Aguas Metropolitanas S.A. (SNSE:IAM) should be aware of the most powerful shareholder groups. 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 last week, public companies endured the biggest losses as the stock fell by 5.6%.

In the chart below, we zoom in on the different ownership groups of Inversiones Aguas Metropolitanas.

View our latest analysis for Inversiones Aguas Metropolitanas

What Does The Institutional Ownership Tell Us About Inversiones Aguas Metropolitanas?

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.

We can see that Inversiones Aguas Metropolitanas does have institutional investors; and they hold a good portion of the company's stock. 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 Inversiones Aguas Metropolitanas' 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 Inversiones Aguas Metropolitanas. Our data shows that Veolia Environnement SA is the largest shareholder with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 8.4% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Inversiones Aguas Metropolitanas

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. 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-- including retail investors -- own 29% 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.

Private Company Ownership

We can see that Private Companies own 9.6%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

Public companies currently own 50% of Inversiones Aguas Metropolitanas 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 be aware of the 2 warning signs we've spotted with Inversiones Aguas Metropolitanas .

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.