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Institutional ownership dominates Kraft Heinz with potential risks

EditorRachael Rajan
Published 25/10/2023, 15:36
Updated 25/10/2023, 15:36
© Reuters.

Institutional investors, including mutual funds and pension funds, hold a majority stake of 51% in The Kraft Heinz Company (NASDAQ:KHC). This significant holding reflects a positive outlook for the company's future prospects. However, this concentration of ownership also carries potential risks. Specifically, the stock price could face sharp declines if large institutional investors decide to sell their shares simultaneously.

The influence of institutional investors extends beyond financial investment. Given that they collectively own over half of Kraft Heinz, these institutions have the power to significantly sway board decisions. Berkshire Hathaway Inc . (NYSE:BRKa), as the largest shareholder, holds 27% of Kraft Heinz shares. The second and third largest shareholders own about 7.9% and 6.8% respectively. Together, the top five shareholders possess half of the company's shares, granting them substantial decision-making power.

Private equity firms hold a 7.9% stake in Kraft Heinz, which could further influence the board's decisions. Additionally, public companies own a significant 27% of Kraft Heinz stock. This large stake indicates potential for strategic collaborations due to intertwined business interests.

Despite this institutional dominance, other types of shareholders exist within Kraft Heinz's ownership structure. Retail investors hold a 14% stake in the company. However, their influence may be limited if their views contradict those of major shareholders. Insider ownership in Kraft Heinz is less than 1%, with insiders collectively owning US$100m worth of stock. While this aligns leaders' interests with those of shareholders', it may present accountability challenges given its relatively small proportion.

In summary, institutional investors hold a dominant position in Kraft Heinz's shareholding structure, wielding significant influence over company policy and direction. However, this concentration also brings potential risks, particularly in terms of stock price volatility and potential conflicts between different types of shareholders.

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