| Getting to Know The Numbers |
The Institutional Ownership table shows the extent to which institutional investors (pension funds, mutual funds, insurance companies, etc.) own a stock. It's important to know what institutional investors are doing for two reasons. First, the phrase "institutional investor" refers to a group of professional securities analysts and portfolio managers. Nobody, including those who invest for institutional accounts, is infallible, but we are dealing here with skilled people whose opinions ought to be taken into consideration. Second, there's the matter of size. Institutions account for a large portion of daily stock trading. So their forecasts can become self-fulfilling, at least in the short term. In other words, if the institutional investment community turns bearish on a stock, it would be hard for that issue to perform well in the market, until something occurs that causes institutions to reassess their expectations. For individual investors, there's another intriguing way to look at the Institutional Ownership table. This opportunity arises when the number of institutions that own a position in the company is small. That would indicate that the company has been noticed, at least to some degree, by institutions. But if the company cannot yet be deemed "widely held," the stock may rise as it gets better known and more institutions decide to buy in. Many believe it is best to own a company that is between 5 and 20 percent owned by institutions. Such a level would suggest that there is some institutional interest and some knowledge of the company, and that there's also ample room for more institutional interest in the future (presumably to be accompanied by strong share price performance as additional institutions buy in). | |||||||||||||||||||||