Arcos Dorados Holdings Inc. (NYSE:ARCO) institutional owners may be pleased with recent gains after 28% loss over the past year

Key Insights

• Given the large stake in the stock by institutions, Arcos Dorados Holdings' stock price might be vulnerable to their trading decisions
• The top 3 shareholders own 51% of the company
• 42% of Arcos Dorados Holdings is held by insiders

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Every investor in Arcos Dorados Holdings Inc. (NYSE:ARCO) should be aware of the most powerful shareholder groups. With 44% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors would probably welcome last week's 3.9% increase in the share price after a year of 28% losses as a sign that returns may to begin trending higher.

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

View our latest analysis for Arcos Dorados Holdings

What Does The Institutional Ownership Tell Us About Arcos Dorados Holdings?

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 Arcos Dorados Holdings. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Arcos Dorados Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Arcos Dorados Holdings is not owned by hedge funds. From our data, we infer that the largest shareholder is Woods Staton (who also holds the title of Top Key Executive) with 38% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. With 6.5% and 6.4% of the shares outstanding respectively, Teachers Insurance and Annuity Association-College Retirement Equities Fund and T. Rowe Price Group, Inc. are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Arcos Dorados Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Arcos Dorados Holdings Inc.. It is very interesting to see that insiders have a meaningful US$677m stake in this US$1.6b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Arcos Dorados Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For example, we've discovered 2 warning signs for Arcos Dorados Holdings that you should be aware of before investing here.

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.