Yahoo Finance In spite of recent selling, insiders still control 67% of Karat Packaging Inc. (NASDAQ:KRT)
Key Insights
Insiders appear to have a vested interest in Karat Packaging's growth, as seen by their sizeable ownership
66% of the business is held by the top 2 shareholders
To get a sense of who is truly in control of Karat Packaging Inc. (NASDAQ:KRT), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 67% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Even though insiders have sold shares recently, the group owns the most numbers of shares in the company.
Let's delve deeper into each type of owner of Karat Packaging, beginning with the chart below.
See our latest analysis for Karat Packaging
What Does The Institutional Ownership Tell Us About Karat Packaging?
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.
Karat Packaging already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Karat Packaging's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Karat Packaging. The company's CEO Alan Yu is the largest shareholder with 35% of shares outstanding. Marvin Cheng is the second largest shareholder owning 31% of common stock, and Wellington Management Group LLP holds about 3.0% of the company stock. Interestingly, the second-largest shareholder, Marvin Cheng is also Secretary, again, pointing towards strong insider ownership amongst the company's top shareholders.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 66% stake.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Karat Packaging
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.
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.
Our most recent data indicates that insiders own the majority of Karat Packaging Inc.. This means they can collectively make decisions for the company. Given it has a market cap of US$433m, that means they have US$288m worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 12% 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Karat Packaging better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Karat Packaging .
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.
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.
