The recent price drop must have disappointed institutional investors in Nu Holdings Ltd. (NYSE:NU) who hold 24% of the shares

If you want to know who actually controls Nu Holdings Ltd. (NYSE: NU), you will need to review the composition of its share register. We can see that institutions hold the lion’s share of the business with 24% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

As the market capitalization fell to $18 billion last week, institutional investors would have suffered the highest losses of any other group of shareholders in the company.

Let’s take a closer look at what different types of shareholders can tell us about Nu Holdings.

See our latest analysis for Nu Holdings

NYSE: NU Ownership Breakdown July 16, 2022

What does institutional ownership tell us about Nu Holdings?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Nu Holdings has institutional investors; and they own a good part of the shares of the company. This may indicate that the company has some degree of credibility in the investment community. However, it is better to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Nu Holdings’ past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
NYSE: NU Earnings and Revenue Growth July 16, 2022

It appears that hedge funds own 5.5% of Nu Holdings shares. This catches my attention because hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Rua California Ltd. is currently the largest shareholder of the company with 21% of the outstanding shares. For context, the second shareholder owns approximately 12% of the outstanding shares, followed by an 8.9% ownership by the third shareholder.

Looking further, we found that 53% of the shares are held by the top 5 shareholders. In other words, these shareholders have a say in the decisions of the company.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider ownership of Nu Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Shareholders would likely be interested to learn that insiders hold shares of Nu Holdings Ltd. Insiders hold a significant stake worth $494 million. sometimes we are interested in whether they bought or sold.

General public property

The general public, who are usually individual investors, hold an 18% stake in Nu Holdings. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.

Private equity ownership

The private equity firms have a 21% stake in Nu Holdings. This suggests that they can influence key policy decisions. Sometimes we see private capital sticking around for the long haul, but generally they have a shorter investment horizon and, as the name suggests, don’t invest heavily in public companies. After a while, they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Private companies appear to own 21% of Nu Holdings shares. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.

Ownership of a public company

Public companies currently hold 8.1% of Nu Holdings shares. It’s hard to say for sure, but it suggests they have intertwined business interests. This could be a strategic stake, so it’s worth monitoring this space for ownership changes.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Be aware that Nu Holdings displays 1 warning sign in our investment analysis you should know…

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.