With 82% ownership of the shares, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is heavily dominated by institutional owners
Given the large stake in the stock by institutions, Kratos Defense & Security Solutions' stock price might be vulnerable to their trading decisions
The top 13 shareholders own 51% of the company
Every investor in Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 82% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
Let's delve deeper into each type of owner of Kratos Defense & Security Solutions, beginning with the chart below.
See our latest analysis for Kratos Defense & Security Solutions
What Does The Institutional Ownership Tell Us About Kratos Defense & Security Solutions?
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.
Kratos Defense & Security Solutions already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Kratos Defense & Security Solutions, (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 Kratos Defense & Security Solutions. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 9.3% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.6% of common stock, and ARK Investment Management LLC holds about 6.1% of the company stock. In addition, we found that Eric DeMarco, the CEO has 0.6% of the shares allocated to their name.
After doing some more digging, we found that the top 13 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Kratos Defense & Security Solutions
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 Kratos Defense & Security Solutions, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$35m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 16% stake in Kratos Defense & Security Solutions. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand Kratos Defense & Security Solutions better, we need to consider many other factors. Be aware that Kratos Defense & Security Solutions is showing 1 warning sign in our investment analysis , you should know about...
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here