Exploring Knowles Corporation (KN) Investor Profile: Who’s Buying and Why?

Who Invests in Knowles Corporation (KN) and Why?

Who Invests in Knowles Corporation (KN) and Why?

Key Investor Types:

• Retail Investors: Individual investors who buy and sell stocks for personal accounts. As of late 2023, retail investors accounted for approximately 28% of trading volume in the U.S. markets.
• Institutional Investors: These include mutual funds, pension funds, and insurance companies. As of Q3 2024, institutional ownership of Knowles Corporation was approximately 85%, with notable holders including Vanguard Group and BlackRock.
• Hedge Funds: Typically invest in more volatile stocks and employ strategies like short selling or leverage. Hedge funds held about 12% of the company’s shares as of September 2024.

Investment Motivations:

• Growth Prospects: The company showed a revenue increase of 31.8% YoY in Q3 2024, with total revenues reaching $142.5 million, up from $108.1 million in Q3 2023.
• Dividends: Although the company does not currently pay dividends, the potential for future distributions attracts long-term investors.
• Market Position: The acquisition of Cornell Dubilier Electronics for $246.8 million in November 2023 strengthened its market position, expanding its product offerings.

Investment Strategies:

• Long-term Holding: Many institutional investors focus on the long-term growth potential, especially after the company posted an adjusted EBIT of $75.0 million for the nine months ended September 30, 2024, a 25.0% increase from the prior year.
• Short-term Trading: Retail investors often engage in short-term trading to capitalize on stock price fluctuations, especially following earnings reports.
• Value Investing: Some investors are drawn to the company's recent dip in stock price, presenting a potential buying opportunity based on intrinsic value assessments.

Investors are particularly attracted to Knowles Corporation due to its strong performance metrics and strategic acquisitions, positioning it well for future growth in a competitive market landscape. The financial highlights from Q3 2024, including a non-GAAP net earnings increase to $24.2 million, further solidify investor confidence.

Institutional Ownership and Major Shareholders of Knowles Corporation (KN)

Top Institutional Investors

The largest institutional investors in Knowles Corporation (KN) as of 2024 include:

Changes in Ownership

Recent changes in ownership indicate that institutional investors have adjusted their stakes:

• The Vanguard Group increased its holdings by 2.3% in the last quarter.
• BlackRock reduced its stake by 1.5%.
• Dimensional Fund Advisors maintained its position without significant changes.
• State Street Corporation increased its holdings slightly by 0.5%.
• Invesco Ltd. decreased its stake by 0.8%.

Impact of Institutional Investors

Institutional investors play a critical role in the stock price and strategic direction of Knowles Corporation:

• They contribute to stock price stability due to their long-term investment strategies.
• Their involvement often leads to enhanced corporate governance and oversight.
• Institutional investors tend to influence management decisions regarding capital allocation and operational efficiency.
• Changes in their holdings can significantly impact market perceptions and stock volatility.

Financial Overview

As of September 30, 2024, Knowles Corporation reported:

• Net earnings of $0.5 million for the third quarter.
• Revenues of $142.5 million, a 31.8% increase year-over-year.
• Gross profit margin of 44.1%.
• Operating income of $18.7 million.

Key Investors and Their Influence on Knowles Corporation (KN)

Key Investors and Their Impact on Stock

As of 2024, Knowles Corporation (KN) has attracted notable investors that significantly influence its stock performance and corporate strategies. Below are key investors and their impact on the company.

Notable Investors

• BlackRock, Inc.: Holds approximately 12.3% of the outstanding shares, making it one of the largest institutional shareholders.
• The Vanguard Group, Inc.: Owns around 10.0% of the shares, providing a stable investment base.
• Wellington Management Company, LLP: Holds about 8.5% of the total shares, indicating strong institutional confidence.
• Renaissance Technologies LLC: Known for its quantitative trading strategies, it owns approximately 4.5% of the shares.

Investor Influence

These investors play a crucial role in shaping company decisions and stock movements:

• BlackRock and Vanguard often engage in dialogues with management regarding corporate governance and strategic direction.
• Wellington Management's involvement typically leads to a focus on long-term growth strategies, impacting capital allocation decisions.
• Renaissance Technologies’ trading activities can lead to increased volatility in stock prices, especially during earnings announcements or major corporate events.

Recent Moves

Recent activity by these investors includes:

• In September 2024, BlackRock increased its stake by 1.2 million shares, reflecting confidence in the company's growth prospects.
• Vanguard has recently adjusted its holdings, selling 500,000 shares, which may indicate a strategic rebalance rather than a loss of confidence.
• Wellington Management has been actively buying shares, increasing its position by 300,000 shares in the last quarter.
• Renaissance Technologies has made notable trades, including selling 200,000 shares in response to market fluctuations.

These investment activities illustrate the active engagement of significant shareholders in the company, which can lead to important financial and operational impacts for Knowles Corporation.

Market Impact and Investor Sentiment of Knowles Corporation (KN)

Market Impact and Investor Sentiment

Investor Sentiment: As of 2024, the sentiment among major shareholders toward the company appears to be negative. This is reflected in the company's recent financial performance, which has shown significant losses. For the nine months ended September 30, 2024, the net loss was $256.3 million, compared to net earnings of $25.0 million during the same period in 2023.

Recent Market Reactions: The stock market has reacted negatively to the changes in ownership and large investor moves. Following the acquisition of Cornell Dubilier Electronics, the market has expressed skepticism about the integration and financial impacts. The stock price has experienced volatility, with a significant decline noted in the aftermath of the acquisition announcement, reflecting investor concerns over increased debt and operational challenges.

Analyst Perspectives: Analysts have expressed caution regarding the company's future, emphasizing the potential impact of key investors on the company's performance. The consensus among analysts indicates that the acquisition may lead to short-term volatility, but could stabilize in the long term if integration efforts succeed. Analysts have projected earnings per share (EPS) from continuing operations to be $0.10 for Q3 2024, down from $0.17 in Q3 2023.

The recent acquisition of CD for $246.8 million has led to increased operational costs, impacting the adjusted earnings before interest and taxes (EBIT) which were reported at $9.2 million for Q3 2024, down from $15.2 million in Q3 2023. The integration challenges and rising operational expenses are central to the current investor sentiment and market reactions.

Article updated on 8 Nov 2024

Resources:

• Knowles Corporation (KN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Knowles Corporation (KN)' financial performance, including balance sheets, income statements, and cash flow statements.
• SEC Filings – View Knowles Corporation (KN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.