Institutional investors in M. Dias Branco S.A. Indústria e Comércio de Alimentos (BVMF:MDIA3) lost 4.5% last week but have reaped the benefits of longer-term growth

Key Insights

• Given the large stake in the stock by institutions, M. Dias Branco Indústria e Comércio de Alimentos' stock price might be vulnerable to their trading decisions
• 64% of the company is held by a single shareholder (Itaú Investment Solutions S.A.)
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

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A look at the shareholders of M. Dias Branco S.A. Indústria e Comércio de Alimentos (BVMF:MDIA3) can tell us which group is most powerful. With 75% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors was the group most impacted after the company's market cap fell to R$8.7b last week. However, the 17% one-year returns may have helped alleviate their overall losses. But they would probably be wary of future losses.

Let's take a closer look to see what the different types of shareholders can tell us about M. Dias Branco Indústria e Comércio de Alimentos.

Check out our latest analysis for M. Dias Branco Indústria e Comércio de Alimentos

What Does The Institutional Ownership Tell Us About M. Dias Branco Indústria e Comércio de Alimentos?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in M. Dias Branco Indústria e Comércio de Alimentos. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of M. Dias Branco Indústria e Comércio de Alimentos, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in M. Dias Branco Indústria e Comércio de Alimentos. The company's largest shareholder is Itaú Investment Solutions S.A., with ownership of 64%. This implies that they have majority interest control of the future of the company. With 3.9% and 1.6% of the shares outstanding respectively, Turim Investimentos Ltda. and Hartford Funds Management Company, LLC are the second and third largest shareholders.

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 M. Dias Branco Indústria e Comércio de Alimentos

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 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 24% stake in M. Dias Branco Indústria e Comércio de Alimentos. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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.

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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.