Where to find institutional ownership

For example, Google's much publicized initial public offering IPO in the fall of was criticized for issuing a special class of super voting shares to certain company executives.

Critics of the dual-class share structure contend that, should managers yield less than satisfactory results, they are less likely to be replaced because they possess 10 times the voting power of normal shareholders. While insider buying is usually a good sign, don't be alarmed by insider selling, unless there is a lot of it.

Insiders tend to buy because they have positive expectations, but they may sell for reasons independent of their expectations for the company. It's important to know which insiders to watch. Look for clusters of activity by several insiders. If a company has more than one instance of similar insider trading over a short period, there's a sign of a consensus of insider opinion. Large transactions also mean more than small trades. Insiders with proven track records with their Form 4 activity should be watched more closely than those with little or poor past records.

The most telling trading activity comes from top executives with the best insights into the company, so look for transactions by CEOs and CFOs. Finally, be careful about placing too much stake in insider trading since the documents reporting them can be hard to interpret. A lot of Form 4 trades do not represent buying and selling that relate to future stock performance. The exercise of stock options , for instance, shows up as both a buy and a sell on Form 4 documents, so it is a dubious signal to follow.

Automatic trading is another activity that is hard to interpret. To protect themselves from lawsuits, insiders set up guidelines for buying and selling, leaving the execution to someone else.

SEC Form 4 documents disclose these hands-off insider transactions, but they don't always state that the sales were scheduled far ahead of time. Organizations that control a lot of money— mutual funds , pension funds, or insurance companies—which buying securities are referred to as institutional investors. These entities own shares on behalf of their clients, and are generally believed to be the force behind supply and demand in the market.

Whether institutional ownership in a stock is a good thing remains a matter of debate. Peter Lynch , in his best-seller One Up on Wall Street, lists the 13 characteristics of the perfect stock. One of them is this: "Institutions don't own it and the analysts don't follow it. Lynch argues that companies whose stock is owned by institutional investors are fairly valued, if not overvalued. William O'Neil, founder of Investor's Business Daily, on the other hand, argues that it takes a significant amount of demand to move a share price up, and the largest source of demand for stocks are institutional investors.

O'Neil reckons that if a stock has no institutional owners, it's because they have already seen it and rejected it. In his book How to Make Money in Stocks, O'Neil has institutional sponsorship as the sixth characteristic to look for in stocks worth buying. O'Neil and Lynch both agree that institutional ownership can be dangerous. These big institutions move in and out of positions in very large blocks so they cannot buy or sell holdings gracefully.

If something goes wrong with a company and all its big owners sell en masse, the stock's value will plunge. Although there are mutual funds that operate with longer-term horizons, and pension funds tend to be long-term stockholders, institutional investors tend to react to short-term events. The high correlation between high institutional ownership and stock price volatility is a fact of life in investing, and so it pays to know what the institutions are up to and whether a stock you are interested in already has a large institutional interest.

Yahoo Finance also provides a very useful site that details stock ownership. Get a quote of a particular company, and then click the section labeled "Holders" to receive details on the company's institutional holders. Sure, insiders and institutions tend to be smart, diligent and sophisticated investors , so their ownership is a good criterion for a first screen in your research or a reliable confirmation of your analysis of a stock.

But never base an investment decision solely on insider or institutional ownership information. Securities and Exchange Commission. Go to WRDS. Choose Thomson Reuters as your dataset, then look under Institutional 13f Holdings. Use Thomson ONE. Search by company name or ticker in the top left corner.

Then, under the Company Views menu, click on Share Ownership. Search company by name Scroll to Investors. Toggle action bar FAQ Actions. Print Tweet Share on Facebook Was this helpful? Contact Us. Lippincott Library. When they do, however, it can be seen as a judgment on the stock's value and drive down its price.

Given the way institutions tend to approach stock ownership , by taking the time to accumulate the number of shares desired for its position, they might also react collectively to significant news. Not only will the trading activity be followed by retail investors, but other institutional investors might also retreat from a stock en masse if significant issues are discovered.

Institutions may also work to drive the share price higher once they own the stock. TV appearances, articles in high-profile publications and presentations at investor conferences help to move the stock higher, increasing the value of the position. The reputation of institutional owners can also influence whether analysts and fund managers at other institutions are interested in buying that stock.

For example, if a firm is well-known as a momentum investor, some fund managers may shy away from buying stock heavily owned by that institution. However, if a firm has a reputation for choosing stocks that perform well over the long term, fund managers may be more likely to buy stock that is heavily invested in by that firm.

When institutions represent the majority of ownership in a given security, there can be a number of issues that arise. With the resources available to institutions, it could be possible for nearly all outstanding shares of a security to be acquired and controlled by these entities, including borrowed shares that short sellers were using to bet against the stock. Such a concentration of ownership may lead to peak ownership where there is little room for new retail investors or any significant trading activity.

Furthermore, peak ownership can mean there will be no further significant investments by institutions into the security, which may lead to diminished upside potential for the stock. With a significant portion of shares locked up in institutional ownership, there may be little opportunity for further investment. Investing Essentials. Portfolio Management. Sustainable Investing.

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