UK Markets closed
  • NIKKEI 225

    27,346.88
    +19.77 (+0.07%)
     
  • HANG SENG

    22,072.18
    +229.85 (+1.05%)
     
  • CRUDE OIL

    77.06
    -1.81 (-2.29%)
     
  • GOLD FUTURES

    1,964.20
    +18.90 (+0.97%)
     
  • DOW

    34,313.77
    +227.73 (+0.67%)
     
  • BTC-GBP

    19,043.81
    +311.03 (+1.66%)
     
  • CMC Crypto 200

    536.17
    +293.50 (+120.94%)
     
  • Nasdaq

    11,898.81
    +314.26 (+2.71%)
     
  • ^FTAS

    4,252.85
    -2.87 (-0.07%)
     

Lockheed Martin Corporation (NYSE:LMT) is largely controlled by institutional shareholders who own 76% of the company

To get a sense of who is truly in control of Lockheed Martin Corporation (NYSE:LMT), it is important to understand the ownership structure of the business. With 76% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

In the chart below, we zoom in on the different ownership groups of Lockheed Martin.

Check out our latest analysis for Lockheed Martin

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About Lockheed Martin?

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.

Lockheed Martin 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. 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 Lockheed Martin's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
earnings-and-revenue-growth

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Lockheed Martin is not owned by hedge funds. The company's largest shareholder is State Street Global Advisors, Inc., with ownership of 15%. The Vanguard Group, Inc. is the second largest shareholder owning 8.7% of common stock, and BlackRock, Inc. holds about 6.6% of the company stock.

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 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 Lockheed Martin

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

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 less than 1% of Lockheed Martin Corporation. 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$85m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 24% stake in Lockheed Martin. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with Lockheed Martin .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here