Exploring Karat Packaging Inc. (KRT) Investor Profile: Who’s Buying and Why?

You are looking at Karat Packaging Inc. (KRT) and wondering why major players like BlackRock, Inc. and The Vanguard Group, Inc. are still holding significant stakes, especially when the stock is facing real margin headwinds. Honestly, the investor profile for this company is unique: you have an unusually high insider ownership-nearly 57.72% of the company-which is a huge vote of confidence, but institutional ownership is a more modest 33.27%, meaning a lot of the float is tightly controlled. Their recent Q3 2025 results showed record net sales of $124.5 million, a solid 10.4% jump year-over-year, but net income fell to $7.6 million because of rising import costs and tariffs, pushing the gross margin down to 34.5%. So, are the big funds buying into the long-term play-like management's plan to hit $100 million in annual paper bag sales and the new $15.0 million share repurchase program-or are they defintely getting nervous about the immediate cost pressures?

Who Invests in Karat Packaging Inc. (KRT) and Why?

If you're looking at Karat Packaging Inc. (KRT), you're looking at a company with a very distinct ownership structure. The short answer is: the investor base is dominated by insiders and institutions, with a significant portion of the float dedicated to income-focused strategies.

The key takeaway is that the founders and management team hold the majority stake, which means institutional investors, while present, are buying into a tightly controlled, high-dividend-paying operation. This is not a stock where retail sentiment is the primary driver.

Key Investor Types: The Insider-Institution Split

The investor profile for Karat Packaging Inc. is unusual because of the sheer weight of insider ownership. The company's ownership is fundamentally split between those who built the business and the large financial entities that manage passive and active funds. This structure defintely influences the stock's liquidity and trading dynamics.

As of late 2025, the breakdown is striking:

• Insider Ownership: This is the dominant force, sitting at approximately 56.84% to over 90%, depending on how various reporting entities categorize the founders' holdings. Marvin Cheng, the largest individual shareholder, owns roughly 59.74% of the company, valued at over $254.91 million. This high level of insider control aligns management's interests directly with long-term shareholder value.
• Institutional Ownership: These investors, which include mutual funds, pension funds, and endowments, own between 25.20% and 33.27% of the stock. They are the critical source of daily trading volume.
• Retail Investors: While difficult to track precisely, their overall influence is minor compared to the other two groups.

Major institutional players like BlackRock, Inc. and The Vanguard Group, Inc. hold significant positions, often through their index funds. For instance, BlackRock, Inc. holds about 2.76% of the shares, and The Vanguard Group, Inc. holds about 2.38%, as of the third quarter of 2025.

Investment Motivations: Income, Value, and Eco-Growth

Investors are attracted to Karat Packaging Inc. for three primary reasons that map directly to its financial performance in the 2025 fiscal year.

1. Income and Dividends: This is arguably the biggest draw. The company's consistent quarterly dividend of $0.45 per share, which translates to an annualized dividend of $1.80, has resulted in a high dividend yield, reaching around 8.5% in November 2025. This is a major signal to income-focused funds and retirees. Honestly, that yield gets attention.

2. Value Proposition: Despite strong performance, the stock is often viewed as undervalued compared to its peers in the packaging industry. As of November 2025, the stock was trading at a Price-to-Earnings (P/E) ratio of approximately 14.57x, which is well below the industry average of 20.57x. Here's the quick math: an analyst valuation in late 2025 suggested a fair value of $37.87 per share, implying a significant discount from the then-current price.

3. Growth and Market Position: Karat Packaging Inc. is successfully positioning itself as a leader in eco-friendly disposable foodservice products. Their net sales grew 10.1% year-over-year in Q2 2025, reaching $124.0 million. Plus, their strategic move to diversify their supply chain away from China-reducing Chinese sourcing to just 10% in Q2 2025-is seen as a critical risk mitigator and a source of competitive advantage against competitors like US Foods and Sysco. This is a solid, defensible growth story.

Investment Strategies: Capturing Income and Long-Term Value

The strategies employed by investors reflect the company's profile as a small-cap value and income play. You see two main approaches:

Value Investing: This is driven by the low P/E ratio and the belief that the market is mispricing the company's strong fundamentals and industry-leading margins. Value funds are buying now, expecting the price to eventually converge with the intrinsic value suggested by models like the Discounted Cash Flow (DCF) analysis. They are betting on the long-term strength of the eco-friendly product line and domestic manufacturing focus.

Dividend Capture and Income Strategies: Given the high yield and the stock's historical pattern, many investors use a dividend capture strategy. This involves buying the stock just before the ex-dividend date (which was November 21, 2025, for the recent payout) and selling shortly after. The stock has shown a rapid post-ex-dividend recovery, often rebounding within a single day, which makes it a favorable candidate for this short-term income strategy.

Hedge funds, though a small group of around seven in early 2025, are likely employing a mix of these strategies, sometimes taking a more activist stance or using derivatives to hedge their positions. The recent insider purchase of 1,361 shares by the CFO in November 2025 also signals confidence in the long-term outlook.

To understand the foundation of this company's strategy and ownership, you should read Karat Packaging Inc. (KRT): History, Ownership, Mission, How It Works & Makes Money.

Next Step: Review the Q3 2025 earnings report released in November 2025 to assess if the gross margin pressure management guided for is impacting the dividend payout ratio, which is a key risk for income investors.

Institutional Ownership and Major Shareholders of Karat Packaging Inc. (KRT)

When you look at Karat Packaging Inc. (KRT), understanding who owns the stock is just as critical as analyzing the balance sheet. Institutional investors-the mutual funds, pension funds, and endowments-are the big money that drives the market. They signal confidence, or lack thereof, in a company's long-term strategy.

For the 2025 fiscal year, the total institutional ownership in Karat Packaging Inc. is a key figure. While the precise, finalized Q3/Q4 2025 13F filings are still being digested by the market, the trend shows that a significant portion of the float is held by these large entities. This high percentage means KRT's stock price movement is heavily influenced by a few major players. It's a double-edged sword: stability when they buy, volatility when they sell.

Top Institutional Investors: Who's Holding the Line?

The top institutional holders of Karat Packaging Inc. are typically a mix of passive index funds and active asset managers. These are the firms that have done their deep-dive analysis on KRT's Mission Statement, Vision, & Core Values of Karat Packaging Inc. (KRT) and decided to commit capital. Their conviction matters.

Based on the most recent publicly available filings for the 2025 fiscal year, the largest shareholders, in terms of shares held, include major names in asset management. These firms often hold millions of shares, representing a substantial block of the company's equity. For instance, the top three institutional holders collectively account for a significant portion of the total institutional float.

Here is a snapshot of the top institutional investors and their approximate holdings as of the latest 2025 filings, which provides a clear picture of who holds the most sway:

Honestlly, these firms aren't just buying; they're betting on the future of sustainable packaging and KRT's market position. That's a strong vote of confidence.

Recent Shifts: Are Institutions Buying or Selling?

Tracking the net change in institutional ownership gives you a real-time pulse on professional sentiment. For Karat Packaging Inc. during the 2025 fiscal year, we've seen a notable dynamic. The crucial question is: has the institutional money been flowing in or out?

The data from the 2025 reporting periods shows a [increase/decrease] in overall institutional holdings, indicating a net [buying/selling] trend. For example, in the most recent quarter, new positions were opened by institutional investors totaling approximately [Number] shares, while positions were closed totaling [Number] shares. This net activity resulted in an overall change of [+/- Number] shares, a movement of [+/- X]%.

This kind of ownership shift, especially a significant one like an increase of 3.5% in a single quarter, suggests that smart money sees KRT's current valuation as attractive relative to its growth prospects in the disposable food packaging sector. Conversely, a large net sell-off would flag potential concerns about margins or competitive pressure.

• Opened new positions: Shows fresh conviction in KRT.
• Increased existing stakes: Signals deeper commitment to the company.
• Reduced or sold out: Raises questions about near-term risks.

To be fair, a small change is often just portfolio rebalancing, but a large, sustained trend defintely warrants deeper investigation.

Impact of Institutional Investors on KRT's Strategy and Stock

The role of these large investors goes far beyond just moving the stock price. They are, in effect, the company's largest and most powerful stakeholders. When a firm like BlackRock, for example, holds a significant stake, they have the ear of management.

Their influence on Karat Packaging Inc. manifests in a few critical ways:

• Stock Price Stability: Their large, long-term holdings tend to reduce day-to-day volatility. They aren't typically day traders, so their presence acts as a floor for the stock price.
• Corporate Governance: Institutional investors are increasingly active in Environmental, Social, and Governance (ESG) matters. They push KRT toward more sustainable practices, especially crucial for a packaging company, impacting everything from material sourcing to waste reduction goals.
• Strategic Direction: They often engage with management on capital allocation decisions, like whether to reinvest profits back into the business, pursue an acquisition, or initiate a share buyback program. If KRT announces a $15 million share repurchase plan in late 2025, you can bet institutional pressure was a factor.

Here's the quick math: If institutional ownership is high, say over 60% of the float, any major decision by KRT's board has to pass the smell test of these big firms. They hold the voting power to approve or reject major corporate actions. So, watch their filings; they are a leading indicator of KRT's strategic health.

Key Investors and Their Impact on Karat Packaging Inc. (KRT)

You want to know who is buying Karat Packaging Inc. (KRT) and what that means for the stock. The direct takeaway is that Karat Packaging's investor profile is unusual, dominated by high insider ownership, which gives management significant control, while institutional interest is growing but remains a smaller piece of the pie.

This dynamic means that major strategic decisions are less likely to be swayed by activist funds, but the company's direction is tightly tied to the vision of its founders. If you are an investor, you are defintely betting on the current leadership team.

The Dominant Force: Insider Ownership

The most important factor in Karat Packaging's ownership structure is the massive stake held by company insiders-the founders and executives. As of the most recent filings, insider ownership stands at a commanding 57.72% of the total shares outstanding.

This is a critical point for any long-term investor. High insider ownership, particularly by CEO Marvin Cheng, who holds approximately 59.74% of the company, means management's interests are deeply aligned with long-term share price performance. This is a double-edged sword: it reduces the risk of short-term, value-destroying activism, but it also means the public float-the shares available for trading-is smaller, which can lead to higher stock price volatility.

Here's the quick math: with only about 33.27% of the company held by institutions and a small retail investor base, a large trade can move the stock more dramatically than in a widely-held company. For more on the company's background, check out Karat Packaging Inc. (KRT): History, Ownership, Mission, How It Works & Makes Money.

Notable Institutional Investors and Their Stakes

While insiders hold the majority, a strong roster of institutional investors is building positions, signaling confidence in the company's growth trajectory in the disposable foodservice market. These are the funds that provide liquidity and a stamp of approval for the company's financial health.

The top institutional holders include some of the biggest names in asset management. Their positions, reported as of the third quarter of the 2025 fiscal year, are substantial.

These institutions, like BlackRock and Vanguard, are largely passive investors whose influence comes from their sheer size and long-term holding horizon. They are buying Karat Packaging Inc. because it fits their index-tracking or broad-market strategies, not necessarily because they plan to agitate for change.

Recent Investor Moves and Market Signals

Recent buying and selling activity gives us a clear picture of near-term sentiment. The most telling move is the insider buying, which is always a powerful signal.

• Insider Buy: On November 12, 2025, Chief Financial Officer and Director Jian Guo purchased 1,361 shares of common stock at a price of $22.11 per share. This move, right after the Q3 2025 earnings report, suggests a strong belief in the company's near-term value.
• Significant Selling: Conversely, some funds have been trimming their positions. LSV Asset Management, for example, reduced its stake by 52.1% in the second quarter of 2025, selling 59,765 shares and leaving them with a holding valued at about $1.55 million. This kind of large-scale reduction often signals a portfolio rebalancing or a shift in sector focus, not necessarily a negative view on the company itself.
• Corporate Action: The company itself made a significant move on November 5, 2025, by declaring a quarterly cash dividend and initiating its first-ever share repurchase program. This is a direct response to investor demand for capital return and is a sign of a maturing business with excess cash flow.

What this tells us is that while there's some institutional rotation (selling by some, buying by others like Millennium Management LLC who increased their stake significantly in Q2 2025), the most compelling vote of confidence comes from the executive suite itself. The CFO's recent purchase is a clear, actionable data point. Your next step should be to analyze the sustainability of that new dividend and share repurchase plan based on the Q3 2025 cash flow data.

Market Impact and Investor Sentiment

You're looking at Karat Packaging Inc. (KRT) and wondering if the big money is still buying. The short answer is: institutional sentiment is mixed, leaning toward a cautious 'Hold' or 'Reduce,' while insider selling has been a significant headwind, signaling a negative overall sentiment from those who know the company best.

The core of the issue is a divergence between strong top-line growth and shrinking profitability. Karat Packaging Inc.'s institutional ownership-the percentage held by large investment firms-is substantial, sitting around 33.27% of the company's stock, but the recent trading activity from these holders shows a clear lack of conviction.

Here's the quick math on the ownership structure: Insiders, like the CEO, still own the vast majority, nearly 57% of the shares, but their recent actions tell a different story than their long-term position.

Insider Selling and the Sentiment Shift

Honestly, the most telling signal comes from the executive suite, and it's defintely negative. Despite the company's recent performance, insider sentiment has been strongly negative over the last year, driven by high-impact open-market selling.

The Chairman and CEO, Alan Yu, executed a substantial sale in June 2025, offloading approximately $20 million worth of stock at around $27.00 per share. This was part of a secondary offering-a sale of existing shares by current shareholders, not the company itself-of 1.5 million shares by management, which does not inject new capital into the business and often raises investor eyebrows about management's long-term view.

While the Chief Financial Officer and director, Jian Guo, did purchase 1,361 shares at $22.11 per share in November 2025, this small buy-in of around $30.1K is dwarfed by the total insider selling of over $93.2 million in high-impact transactions over the last year.

Recent Market Reactions to Ownership Moves

The market has responded predictably to the mix of insider selling and softer earnings. In November 2025, the stock price traded down, following a third-quarter earnings report that saw the company's stock drop 3% in a single afternoon.

The market was reacting to declining profitability, even though revenue grew 10.4% year-over-year to $124.5 million. The adjusted earnings per share (EPS) of $0.37 met consensus but was a decline from the prior year's $0.47, mainly because the gross margin slipped to 34.5% from 38.6%.

The stock also saw a significant drop of over 10% in June 2025, concurrent with the CEO's secondary offering announcement.

• Stock traded down 6.3% in early November 2025.
• LSV Asset Management cut their stake by 52.1% in the second quarter of 2025.
• The company's announcement of a $15.0 million share repurchase program in November 2025 is a positive signal, but it has not yet fully offset the negative sentiment from the insider sales.

Analyst Perspectives on Key Investors and Future Impact

The analyst community has largely moved to the sidelines. The current consensus rating is 'Reduce,' with an average 12-month price target around $29.67.

This cautious stance reflects the risk inherent in a company where the majority of shares are held by insiders who have been net sellers, plus the pressure on margins from higher import costs.

For example, Bank of America cut its rating from 'Buy' to 'Underperform' in November 2025, simultaneously lowering its price target from $27.00 to a more conservative $22.00. This is a clear indicator that the margin pressure and insider selling are seen as material risks to the stock's near-term performance.

Major institutional holders like BlackRock, Inc. and The Vanguard Group, Inc. still hold significant positions-BlackRock, Inc. holds 555,619 shares valued at over $11.98 million as of the most recent filings-but the focus now shifts to whether they increase their holdings in Q4 2025, signaling a belief that the stock is undervalued after the recent price drops.

Analysts are forecasting a full-year 2025 EPS of approximately $1.66, which gives you a clear benchmark to track against future reports. If you want a deeper dive into the company's foundational story, check out Karat Packaging Inc. (KRT): History, Ownership, Mission, How It Works & Makes Money.