Kratos Defense & Security Solutions, Inc.'s (NASDAQ:KTOS) institutional investors lost 6.4% last week but have benefitted from longer-term gains

Key Insights

• Institutions' substantial holdings in Kratos Defense & Security Solutions implies that they have significant influence over the company's share price
• A total of 14 investors have a majority stake in the company with 51% ownership
• Recent sales by insiders

If you want to know who really controls Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 84% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 6.4% in value last week. However, the 42% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.

In the chart below, we zoom in on the different ownership groups of Kratos Defense & Security Solutions.

Check out our latest analysis for Kratos Defense & Security Solutions

What Does The Institutional Ownership Tell Us About Kratos Defense & Security Solutions?

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.

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.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Kratos Defense & Security Solutions is not owned by hedge funds. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 9.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.5% and 5.2%, of the shares outstanding, respectively. Furthermore, CEO Eric DeMarco is the owner of 0.7% of the company's shares.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 51% implying that 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 Kratos Defense & Security Solutions

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 report that insiders do own shares in Kratos Defense & Security Solutions, Inc.. The insiders have a meaningful stake worth US$71m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 14% 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Kratos Defense & Security Solutions that you should be aware of.

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.

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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.