Recent uptick might appease Locaweb Serviços de Internet S.A. (BVMF:LWSA3) institutional owners after losing 56% over the past year

Every investor in Locaweb Serviços de Internet S.A. (BVMF:LWSA3) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 50% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week’s R$264m market cap gain would probably be appreciated by institutional investors, especially after a year of 56% losses.

In the chart below, we zoom in on the different ownership groups of Locaweb Serviços de Internet.

View our latest analysis for Locaweb Serviços de Internet

ownership-breakdown
BOVESPA:LWSA3 Ownership Breakdown April 4th 2022

What Does The Institutional Ownership Tell Us About Locaweb Serviços de Internet?

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 Locaweb Serviços de Internet does have institutional investors; and they hold a good portion of the company’s stock. 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 Locaweb Serviços de Internet’s historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growth
BOVESPA:LWSA3 Earnings and Revenue Growth April 4th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Locaweb Serviços de Internet is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 10% of shares outstanding. The second and third largest shareholders are Michel Gora and Ricardo Gora, with an equal amount of shares to their name at 6.1%.

On further inspection, we found that more than half the company’s shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Locaweb Serviços de Internet

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 information suggests that insiders maintain a significant holding in Locaweb Serviços de Internet S.A.. It has a market capitalization of just R$6.2b, and insiders have R$1.7b worth of shares in their own names. That’s quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Locaweb Serviços de Internet. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Locaweb Serviços de Internet better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with Locaweb Serviços de Internet .

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.

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.

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