Institutions along with private equity firms who hold considerable shares inKodiak Gas Services, Inc. (NYSE:KGS) come under pressure; lose 11% of holdings value

Key Insights

• The considerable ownership by private equity firms in Kodiak Gas Services indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 56% of the company
• Recent sales by insiders

If you want to know who really controls Kodiak Gas Services, Inc. (NYSE:KGS), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 38% shares weren’t spared from last week’s US$434m market cap drop, private equity firms as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Kodiak Gas Services.

See our latest analysis for Kodiak Gas Services

What Does The Institutional Ownership Tell Us About Kodiak Gas Services?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Kodiak Gas Services. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Kodiak Gas Services' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Kodiak Gas Services. Looking at our data, we can see that the largest shareholder is Eqt Fund Management S.à R.L. with 44% of shares outstanding. With 6.0% and 5.6% of the shares outstanding respectively, Spartan Energy Partners, LP and FMR LLC are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Kodiak Gas Services

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Kodiak Gas Services, Inc.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Keep in mind that it's a big company, and the insiders own US$5.4m worth of shares. The absolute value might be more important than the proportional share. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Kodiak Gas Services. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 44%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 6.0%, of the Kodiak Gas Services stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Kodiak Gas Services has 5 warning signs (and 2 which are potentially serious) we think you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.