Painful week for private companies invested in Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros (BME:LDA) after 3.7% drop, institutions also suffered losses

Key Insights

• Línea Directa Aseguradora Compañía de Seguros y Reaseguros' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 55% of the business is held by the top 6 shareholders
• Institutional ownership in Línea Directa Aseguradora Compañía de Seguros y Reaseguros is 28%

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A look at the shareholders of Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros (BME:LDA) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 30% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of private companies took a hit after last week’s 3.7% price drop, institutions with their 28% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Línea Directa Aseguradora Compañía de Seguros y Reaseguros.

Check out our latest analysis for Línea Directa Aseguradora Compañía de Seguros y Reaseguros

What Does The Institutional Ownership Tell Us About Línea Directa Aseguradora Compañía de Seguros y Reaseguros?

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 Línea Directa Aseguradora Compañía de Seguros y Reaseguros. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Línea Directa Aseguradora Compañía de Seguros y Reaseguros' historic earnings and revenue below, but keep in mind there's always more to the story.

Línea Directa Aseguradora Compañía de Seguros y Reaseguros is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Cartival S.A. with 20% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 5.3% by the third-largest shareholder.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Línea Directa Aseguradora Compañía de Seguros y Reaseguros

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

Our data cannot confirm that board members are 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, who are usually individual investors, hold a 27% stake in Línea Directa Aseguradora Compañía de Seguros y Reaseguros. 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

Our data indicates that Private Companies hold 30%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

Public companies currently own 14% of Línea Directa Aseguradora Compañía de Seguros y Reaseguros 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Línea Directa Aseguradora Compañía de Seguros y Reaseguros better, we need to consider many other factors. For instance, we've identified 1 warning sign for Línea Directa Aseguradora Compañía de Seguros y Reaseguros that you should be aware of.

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.