Key Insights

• Significantly high institutional ownership implies Kratos Defense & Security Solutions' stock price is sensitive to their trading actions
• 51% of the business is held by the top 16 shareholders
• Insiders have been buying lately

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. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional investors ended up benefitting the most after the company hit US$3.9b in market cap. One-year return to shareholders is currently 49% and last week's gain was the icing on the cake.

Let's delve deeper into each type of owner of Kratos Defense & Security Solutions, beginning with the chart below.

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

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.

We can see that Kratos Defense & Security Solutions does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Kratos Defense & Security Solutions' earnings history below. Of course, the future is what really matters.

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. The Vanguard Group, Inc. is currently the company's largest shareholder with 9.2% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.5% of common stock, and State Street Global Advisors, Inc. holds about 3.9% of the company stock. In addition, we found that Eric DeMarco, the CEO has 0.7% of the shares allocated to their name.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 16 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 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.

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.

We can see that insiders own shares in Kratos Defense & Security Solutions, Inc.. The insiders have a meaningful stake worth US$87m. Most would see this as a real positive. 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 15% 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:

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. To that end, you should be aware of the 1 warning sign we've spotted with Kratos Defense & Security Solutions .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.