Are Institutions Heavily Invested In The Kroger Co.'s (NYSE:KR) Shares?

By
Simply Wall St
Published
April 11, 2022
NYSE:KR
Source: Shutterstock

The big shareholder groups in The Kroger Co. (NYSE:KR) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. We also tend to see lower insider ownership in companies that were previously publicly owned.

Kroger has a market capitalization of US$45b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. In the chart below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Kroger.

Check out our latest analysis for Kroger

ownership-breakdown
NYSE:KR Ownership Breakdown April 11th 2022

What Does The Institutional Ownership Tell Us About Kroger?

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.

Kroger 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 Kroger, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:KR Earnings and Revenue Growth April 11th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Kroger. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 11% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 8.5% by the third-largest shareholder.

After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Kroger

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our data suggests that insiders own under 1% of The Kroger Co. in their own names. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own US$386m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

Public companies currently own 8.5% of Kroger stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Kroger is showing 5 warning signs 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.

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