Lockheed Martin Corporation's (NYSE:LMT) latest 5.4% decline adds to one-year losses, institutional investors may consider drastic measures (2024)

Key Insights

• Significantly high institutional ownership implies Lockheed Martin's stock price is sensitive to their trading actions

• A total of 18 investors have a majority stake in the company with 50% ownership

• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Every investor in Lockheed Martin Corporation (NYSE:LMT) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 74% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, institutional investors endured the highest losses last week after market cap fell by US$8.9b. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 2.4% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Lockheed Martin which might hurt individual investors.

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

View our latest analysis for Lockheed Martin

What Does The Institutional Ownership Tell Us About Lockheed Martin?

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.

Lockheed Martin already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Lockheed Martin, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Lockheed Martin is not owned by hedge funds. The company's largest shareholder is State Street Global Advisors, Inc., with ownership of 15%. In comparison, the second and third largest shareholders hold about 9.0% and 6.8% of the stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 18 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Lockheed Martin

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. 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.

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 data suggests that insiders own under 1% of Lockheed Martin Corporation in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$49m of stock. 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 26% stake in Lockheed Martin. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Lockheed Martin , and understanding them should be part of your investment process.

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.