Exploring Kratos Defense & Security Solutions, Inc. (KTOS) Investor Profile: Who’s Buying and Why?

You're looking at Kratos Defense & Security Solutions, Inc. (KTOS) and wondering if the big institutional money is still lining up, especially after the stock's impressive run-up over 180% in the last year, closing at around $70.67 per share in November 2025. The short answer is yes, they are, but the picture is complex: institutional investors own a massive 75.92% of the company, with giants like Vanguard Group Inc and BlackRock, Inc. leading the charge. For instance, Vanguard Group Inc alone boosted its stake by 11.7%, adding 1.7 million shares in the second quarter, clearly betting on the defense tech upswing.

This accumulation is directly tied to Kratos's financial momentum, which saw third quarter 2025 revenue jump 26.0% to $347.6 million, alongside a record consolidated backlog of $1.480 billion. But here's the defintely real-world twist: while the big funds are piling in, company insiders have been selling, offloading 85,124 shares worth roughly $6.82 million in the last quarter. So, are the institutions seeing a long-term growth story in Unmanned Systems and hypersonic programs that insiders are cashing out on, or is this just routine profit-taking after the company reaffirmed its full-year 2025 revenue projection of $1.31 billion? Let's break down the 13F filings to see exactly which investors are buying and why they are willing to overlook that insider activity.

Who Invests in Kratos Defense & Security Solutions, Inc. (KTOS) and Why?

If you're looking at Kratos Defense & Security Solutions, Inc. (KTOS), you need to understand who you're sharing the cap table with. The short answer is: this stock is defintely a playground for the institutional big guns, who are betting heavily on the company's next-generation defense technology pipeline.

The ownership structure is overwhelmingly professional, which means the stock price is highly sensitive to the trading actions of these large players. You're not looking at a meme stock; you're looking at a serious, long-term growth story, still with significant volatility risk due to its high valuation multiples.

The Dominant Investor: Institutional Giants

Institutional investors-the mutual funds, pension funds, and asset managers-hold the lion's share of Kratos Defense & Security Solutions, Inc. As of early 2025, institutional ownership sat around 86% of the outstanding shares. That's a massive vote of confidence from the professional world, but it also means retail (individual) investors have minimal direct influence on the stock's direction.

These institutions are not monolithic, but they fall into two main camps: passive index funds and active managers. Passive giants like BlackRock, Inc. and Vanguard Group Inc. own a substantial chunk simply because Kratos Defense & Security Solutions, Inc. is a component of key small-cap and growth indices. Active managers, including Franklin Resources Inc., are making a deliberate, high-conviction bet on the company's future growth.

Here's a quick look at the ownership breakdown:

• Institutional Investors: ~86%
• Corporate Insiders: ~2.37% (as of late 2025)
• Retail Investors: Minimal direct ownership

Investment Motivations: Betting on the Future of Defense

Investors are drawn to Kratos Defense & Security Solutions, Inc. not for income-the company does not pay a dividend-but for its outsized growth potential in high-priority defense technology. They are buying a technology company first, and a defense contractor second. The motivation is clear: exposure to the modernization of the US national security apparatus.

The biggest attraction is the company's focus on cost-effective, next-generation platforms like jet-powered Unmanned Aerial Systems (UASs) and hypersonic systems. This focus is translating directly into financial momentum. For the full fiscal year 2025, the company is guiding for revenue between $1.320 billion and $1.330 billion, and Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) between $114 million and $120 million.

Here's the quick math on their forward-looking strength:

• Q3 2025 Revenue: $347.6 million, reflecting 26.0% year-over-year growth.
• Consolidated Backlog (Sept 2025): $1.480 billion, a strong indicator of future revenue.
• Bid and Proposal Pipeline: $13.5 billion, showing a deep well of potential contracts.

The market sees the company as a key enabler of multi-domain modernization (integrating land, sea, air, space, and cyber operations), which underpins recurring demand for their software-defined platforms. You can read more about their strategic direction on the Mission Statement, Vision, & Core Values of Kratos Defense & Security Solutions, Inc. (KTOS).

Strategies: Growth, Value, and Active Trading

Given the high-growth profile and the nature of the defense cycle, investors employ a mix of strategies. Most institutional money is deployed via a long-term growth strategy, holding shares for years to capture the full cycle of program development, deployment, and scaling.

However, the stock's high valuation multiples, like a Price-to-Sales ratio of 9.2x-well above the industry average-suggests that a lot of future growth is already priced in. This is where the value-oriented investors step in, arguing the stock is currently 29.8% Undervalued based on consensus fair value, seeing the high multiples as justified by the explosive growth in key segments like Unmanned Systems.

The presence of hedge funds, such as Citadel Advisors Llc, which actively trades both Call (long) and Put (short) options, points to a sophisticated, short-term trading strategy. They are not just buying and holding; they are actively managing exposure around quarterly earnings, contract announcements, and geopolitical events.

The average analyst price target is currently around $82.06, which gives you a clear benchmark. What this estimate hides, though, is the execution risk inherent in scaling up production and winning those massive, multi-year contracts.

Finance: Track the book-to-bill ratio quarterly; if it drops below 1.0, re-evaluate the growth narrative.

Institutional Ownership and Major Shareholders of Kratos Defense & Security Solutions, Inc. (KTOS)

The investor profile for Kratos Defense & Security Solutions, Inc. (KTOS) is dominated by large institutional money managers, which is typical for a specialized defense contractor. As of the most recent filings, institutional investors own a substantial portion of the company's stock, hovering around 75.92% of the shares outstanding. This high concentration means a few major players essentially drive the stock's long-term stability and liquidity.

Top Institutional Investors: Who Holds the Keys?

When you see institutional ownership this high, you know the big index funds and asset managers are betting on the company's core business of unmanned systems and satellite communications. These are not fast-money traders; they are long-term holders whose investment horizon is often measured in years, not quarters. Here's a quick look at the top five institutional holders based on their Q3 2025 filings (as of September 30, 2025), showing a combined value well over $4.5 billion.

The index giants are defintely leading the pack, which is a good sign for stability.

Here's the quick math: These five firms alone control over 57 million shares, representing a massive vote of confidence in Kratos Defense & Security Solutions' long-term strategy in a competitive sector alongside companies like Lockheed Martin.

Recent Shifts: Who's Buying and Who's Trimming?

Institutional positions are never static, and the recent activity in 2025 shows a mixed, but generally positive, sentiment. We saw some of the largest holders trimming their stakes in Q3 2025, but a significant number of other institutions were actively increasing their exposure, or initiating new positions entirely.

• Trimming: BlackRock, Inc. reduced its position by about 6.9% (or 1.8 million shares) and Vanguard Group Inc cut its stake by around 7.8% (or 1.4 million shares) in Q3 2025. This is often routine rebalancing, especially for index-tracking funds, not a fundamental shift in view.
• Buying: Firms like Morgan Stanley increased its stake by over 33.8% in Q3 2025. Earlier in the year, Voya Investment Management LLC bought an additional 1.2 million shares, and Invesco Ltd. boosted its position by 75.2% in the first quarter.
• New Money: Rovida Advisors Inc. bought a new, sizable stake of approximately $82.3 million in the second quarter, signaling conviction from active managers.

What this estimate hides is the sheer number of smaller institutional buyers-over 376 institutional holders increased their positions in Q3 2025, while 256 decreased theirs. The net effect is a continuous flow of capital into the stock, suggesting that Kratos's focus on advanced technology solutions is resonating with a broad spectrum of professional investors.

Impact on Stock Price and Corporate Strategy

The sheer size of institutional ownership-with nearly four out of every five shares held by these large entities-has a profound impact on Kratos Defense & Security Solutions.

• Stock Stability: These large, passive index funds (like Vanguard and BlackRock) are less likely to panic-sell on minor news, which provides a crucial floor for the stock price. Their consistent presence reduces volatility, making the stock more palatable for other long-term investors.
• Strategic Influence: While index funds are typically passive, active managers like Franklin Resources Inc. and the new entrants often engage with management on capital allocation decisions, like share buybacks or R&D spending. They are looking for a clear return on equity (ROE) and a disciplined approach to the company's FY 2025 guidance of $0.31 earnings per share.
• Valuation Signal: High institutional ownership is often seen as a quality signal. It suggests the company has met the stringent criteria for inclusion in major indices and portfolios, validating its business model and financial health. If you want to dive deeper into the fundamentals, you should check out Breaking Down Kratos Defense & Security Solutions, Inc. (KTOS) Financial Health: Key Insights for Investors.

These big investors are essentially a deep pool of liquidity; when they buy, the stock moves, and when they hold, it stays steady.

Key Investors and Their Impact on Kratos Defense & Security Solutions, Inc. (KTOS)

You need to know who is betting big on Kratos Defense & Security Solutions, Inc. (KTOS) because institutional buying power often signals confidence in the company's long-term strategy, especially in the capital-intensive defense sector. The short takeaway is that massive index funds and growth-focused asset managers are the primary owners, holding a dominant position that provides stability but also means their collective moves drive the stock price.

As of late 2025, institutional investors control a significant chunk of the company, owning about 75.92% of the stock. This high percentage means that a handful of large fund managers effectively dictate the trading volume and, often, the stock's direction. It is defintely a stock where you track the 13F filings (Quarterly Holdings Disclosure) closely.

The Institutional Heavyweights: Who Owns Kratos Defense & Security Solutions, Inc.?

The top investors in Kratos Defense & Security Solutions, Inc. are the usual suspects in the institutional world: the massive passive and active fund managers. These firms are buying because Kratos Defense & Security Solutions, Inc.'s focus on unmanned systems, satellite communications, and cybersecurity aligns with long-term defense spending trends, especially the shift to high-tech, lower-cost solutions.

Here's a quick look at the top institutional holders based on recent 2025 filings, showing their colossal stakes:

• BlackRock, Inc.: Holds the largest position with 26 million shares, valued at approximately $1.2 billion as of June 2025.
• Vanguard Group Inc.: A close second, owning around 16.4 million shares, valued at about $488.3 million in the first quarter of 2025.
• State Street Corporation: Holds a substantial 9.3 million shares, with a value of approximately $434 million as of June 2025.

These three alone represent a huge concentration of ownership. When they move, the stock moves.

Recent Investor Moves: Accumulation and Activism

The trend for most major holders in 2025 has been accumulation, which is a strong bullish signal. For instance, Franklin Resources Inc. increased its position by a notable 29.6% in the second quarter of 2025, bringing its total to 5,086,494 shares valued at $236.3 million. Similarly, ARK Investment Management LLC grew its stake by 22.2% in the second quarter, now holding 4,507,692 shares valued at $209.4 million.

The most aggressive buyer, percentage-wise, was hedge fund Citadel Advisors, which boosted its stake by a staggering 344% as of June 2025. That's a huge vote of confidence. Plus, we saw new money flow in, like Rovida Advisors Inc. acquiring a new position valued at around $82.3 million in Q2 2025. This aggressive buying across various fund types-passive, active, and hedge funds-tells you the market sees a clear runway for growth, especially given the stock's 180.21% price increase over the 12 months leading up to November 2025. For more on the company's background, you can check out Kratos Defense & Security Solutions, Inc. (KTOS): History, Ownership, Mission, How It Works & Makes Money.

Investor Influence and The Near-Term Risk

The influence of these large investors is subtle but powerful. Since many are passive index funds like Vanguard Group Inc. and BlackRock, Inc., they generally don't engage in activist campaigns (Schedule 13D filings) but rather support management and provide a stable floor for the stock. However, their sheer size means any portfolio rebalancing can cause volatility. Here's the quick math: if BlackRock were to sell just 1% of its 26 million shares, that's 260,000 shares hitting the market, which can easily pressure the price.

You saw this play out on November 7, 2025, when the stock closed lower at $74.51 despite positive analyst upgrades and reports of significant institutional buying. The market is complex, and even strong institutional support can't always counteract broader market sentiment or profit-taking. It's important to note the counter-trend: company insiders sold 85,124 shares worth roughly $6.82 million in the last quarter, a small but notable move that reduces insider ownership to about 2.37%. This is a minor red flag; management is taking some chips off the table while institutions are piling in.

The concentration of ownership means that if the company misses a key milestone, like hitting the forecasted $0.31 earnings per share (EPS) for the current fiscal year, a synchronized institutional sell-off could be sharp. Your action item is to track the top holders' quarterly changes, especially the aggressive buyers like Citadel Advisors and Franklin Resources Inc., to gauge conviction levels beyond the next earnings call.

Market Impact and Investor Sentiment

You're looking at Kratos Defense & Security Solutions, Inc. (KTOS) and wondering if the big money is still buying, and honestly, the answer is a nuanced 'yes, but with caution.' Investor sentiment is overwhelmingly positive, with the analyst consensus sitting at a Moderate Buy rating as of November 2025.

The institutional conviction is extremely high, with institutional investors owning around 75.92% to 91.35% of the company's stock, which is a massive vote of confidence in the long-term defense pipeline. However, the stock's valuation is stretched, trading at a staggering trailing Price-to-Earnings (P/E) ratio near 691, which tells you the market is pricing in near-perfect execution on future growth. That's a high bar, defintely.

• Analyst Consensus: Moderate Buy (1 Strong Buy, 12 Buy, 6 Hold).
• Average Price Target: $82.06.
• Institutional Ownership: Approximately 75.92% of shares.

Recent Market Reactions to Ownership Shifts

The stock's recent price action reflects this tug-of-war between strong fundamentals and a rich valuation. For example, on November 21, 2025, shares were up 2.7% to $69.14 after the company beat expectations in its most recent quarter. Kratos reported $347.6 million in revenue, topping the $323.0 million analyst consensus, with Earnings Per Share (EPS) of $0.14 against an expected $0.12.

Still, the stock can be volatile. In the month leading up to mid-November 2025, the share price pulled back by 15.5%, even though the one-year return was an incredible 188%. This kind of sharp correction, even after a massive run, is what happens when a stock trades at a Price-to-Sales (P/S) ratio of 9.2x, which is significantly higher than the defense industry average of around 2.9x. The market is quick to take profits when growth expectations are this high.

Who's Buying and Selling: The Major Shareholders

Looking at the Q3 2025 13F filings (as of September 30, 2025), the largest institutional holders are the passive giants, but their recent activity shows a subtle shift. BlackRock, Inc. and Vanguard Group Inc. remain the top two, holding a combined total of over 40 million shares. However, both decreased their positions in the quarter. BlackRock, Inc. reduced its stake by 6.935% (selling 1,801,350 shares), and Vanguard Group Inc. decreased its holdings by 7.767% (selling 1,396,358 shares).

Contrast this with active managers like Morgan Stanley and First Trust Advisors LP, who significantly increased their positions, signaling an active bet on the company's future execution. Morgan Stanley boosted its stake by 33.802%, acquiring 804,991 additional shares. This tells me that while the index funds are rebalancing, a number of active funds are still accumulating, seeing the recent pullback as a buying opportunity.

Analyst Perspectives on Key Investor Impact

The biggest impact from these key investors is the confidence they project onto the company's core growth story: Unmanned Systems. Analysts have noted the strong growth in Kratos Defense & Security Solutions, Inc.'s Unmanned Systems (KUS) segment, which saw organic revenue growth of 35.8% in Q3 2025. This is the 'why' behind the high valuation and the institutional accumulation.

The Street is forecasting a full-year 2025 EPS of $0.31 and has raised the FY 2025 revenue guidance to between $1.320 billion and $1.330 billion. This is the company's financial playbook, and the large investors are essentially betting that management can deliver on the high end of this guidance. If you want a deeper dive into the numbers underpinning this growth, you can check out Breaking Down Kratos Defense & Security Solutions, Inc. (KTOS) Financial Health: Key Insights for Investors. The risk, as analysts like Stifel and Robert W. Baird (with targets of $112.00 and $87.00, respectively) imply, is not the business model, but the valuation multiple being paid for it. You're buying a growth story, not a value stock.