Both individual investors who control a good portion of Direcional Engenharia S.A. (BVMF:DIRR3) along with institutions must be dismayed after last week’s 12% decrease

If you want to know who really controls Direcional Engenharia S.A. (BVMF:DIRR3), then you’ll have to look at the makeup of its share registry. With 55% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 12% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 41% stock also took a hit.

Let’s take a closer look to see what the different types of shareholders can tell us about Direcional Engenharia.

Check out our latest analysis for Direcional Engenharia

What Does The Institutional Ownership Tell Us About Direcional Engenharia?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Direcional Engenharia does have institutional investors; and they hold a good portion of the company’s stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Direcional Engenharia, (below). Of course, keep in mind that there are other factors to consider, too.

Direcional Engenharia is not owned by hedge funds. Our data shows that Alliança Fundo de Investimento Multimercado Credito Privado is the largest shareholder with 10% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.5% and 5.0%, of the shares outstanding, respectively. In addition, we found that Ricardo Valadares Gontijo, the CEO has 2.3% of the shares allocated to their name.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Direcional Engenharia

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Direcional Engenharia S.A.. It has a market capitalization of just R$1.7b, and insiders have R$72m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public — including retail investors — own 55% of Direcional Engenharia. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. Consider risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Direcional Engenharia you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.