Institutions hold 38% of the shares of Neoenergia SA (BVMF: NEOE3) but public companies control 51% of the company


To get a sense of who actually controls Neoenergia SA (BVMF: NEOE3), it is important to understand the ownership structure of the business. And the group that holds the biggest slice of the pie are the 51% -owned state-owned companies. In other words, the group has everything to gain (or lose the most) from its investment in the business.

Institutions, for their part, represent 38% of the company’s shareholders. Generally speaking, as a business grows, institutions increase their participation. Conversely, insiders often decrease their ownership over time.

In the graphic below, we zoom in on the different Neoenergia property groups.

See our latest analysis for Neoenergia

Breakdown of BOVESPA property: NEOE3 December 17, 2021

What does institutional ownership tell us about Neoenergia?

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

We can see that Neoenergia has institutional investors; and they own a large portion of the company’s stock. This suggests some credibility among professional investors. But we cannot rely on this fact alone because institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp drop in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Neoenergia’s past revenue trajectory (below). Of course, keep in mind that there are other factors to consider as well.

profit and revenue growth
BOVESPA: NEOE3 Profits and Revenue Growth December 17, 2021

We find that the hedge funds do not have a significant investment in Neoenergia. Looking at our data we can see that the largest shareholder is Iberdrola, SA with 51% of the shares outstanding. This implies that they have majority control over the future of the business. With respectively 30% and 1.1% of the shares outstanding, Caixa De Previdencia Dos Funcionarios Do Banco Do Brasil and Moat Capital Gestao De Recursos Ltda are the second and third shareholders.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the feelings of analysts. Many analysts cover the stock, so it can be interesting to see what they are forecasting as well.

Insider ownership of Neoenergia

The definition of an insider may differ slightly from country to country, but board members still count. The management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We note that our data does not show any member of the board of directors owning shares, personally. It is unusual not to have at least some personal holdings of board members, so our data may be wrong. A good next step would be to check how much the CEO is paid.

General public property

With an 11% stake, the general public, made up mainly of individual investors, has some influence over Neoenergia. While this group cannot necessarily take the lead, it can certainly have a real influence on how the business is run.

Public enterprise ownership

It appears to us that public companies hold 51% of Neoenergia. It’s hard to say for sure, but it suggests that they have intertwined business interests. This can be a strategic issue, so it’s worth watching this space for changes in ownership.

Next steps:

I find it very interesting to see who exactly owns a company. But to really understand better, we have to take other information into account as well. Concrete example: we have spotted 4 warning signs for Neoenergia you need to be aware of this, and 3 of them cannot be ignored.

If you’d rather find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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