AES Brasil Energia S.A.'s (BVMF:AESB3) market cap surged R$253m last week, public companies who have a lot riding on the company were rewarded

Simply Wall St · 09/15/2023 09:02

Key Insights

  • Significant control over AES Brasil Energia by public companies implies that the general public has more power to influence management and governance-related decisions
  • A total of 2 investors have a majority stake in the company with 54% ownership
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

If you want to know who really controls AES Brasil Energia S.A. (BVMF:AESB3), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are public companies with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies collectively scored the highest last week as the company hit R$7.0b market cap following a 3.7% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about AES Brasil Energia.

View our latest analysis for AES Brasil Energia

ownership-breakdown
BOVESPA:AESB3 Ownership Breakdown September 15th 2023

What Does The Institutional Ownership Tell Us About AES Brasil Energia?

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.

AES Brasil Energia already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 AES Brasil Energia's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
BOVESPA:AESB3 Earnings and Revenue Growth September 15th 2023

AES Brasil Energia is not owned by hedge funds. The AES Corporation is currently the company's largest shareholder with 47% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.0% and 5.7%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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

Insider Ownership Of AES Brasil Energia

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

We can see that insiders own shares in AES Brasil Energia S.A.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around R$352m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in AES Brasil Energia. 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 Equity Ownership

Private equity firms hold a 7.0% stake in AES Brasil Energia. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

Public companies currently own 53% of AES Brasil Energia 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 AES Brasil Energia better, we need to consider many other factors. For instance, we've identified 3 warning signs for AES Brasil Energia (1 doesn't sit too well with us) that you should be aware of.

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.