Re: [CANSLIM] Inst Ownership

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Inst Ownership
Date: Thu, 15 Aug 2002 23:43:38 -0500
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Hi Charley et al,

Mark Boucher (The Hedge Fund Edge) recommends in his work that =
institutional ownership (banks + mutual funds) runs 10-30%. WON seems to =
take a more generalist view of the actual percentage and instead focuses =
on both the quality of ownership and the fact that ownership is =
increasing. As with Boucher, WON considers both mutual funds and banks =
to be "institutional owners."

A great place to check ownership is at:
http://moneycentral.msn.com/investor/invsub/ownership/ownership.asp?Symbo=
l=3DSBUX
Then use either the IBD's Mutual Fund ratings or look up ratings at =
www.morningstar.com to take a look at quality of ownership.

- -Katherine

From AskIBD (highlighting is mine):

Question


What percentage of a company's shares outstanding should be owned by =
institutions in order for the stock to qualify as institutionally well =
sponsored?

=20

Answer


It's not so much what percentage of a company's stock is owned by =
institutions as the number of institutions that own it. You don't want =
to see just one institution owning it. Any stock you consider purchasing =
should be owned by at least a few mutual funds and preferably one or =
more banks or other institutional investors. Also, look for stocks owned =
by at least one top-rated mutual fund. The better funds research =
companies extensively. So when they buy a stock, it serves as way to =
cross-check how sound the company is.

=20

Question


Can too much institutional sponsorship be a bad thing?

=20

Answer


It depends on the company, their earnings and their products. In theory, =
if a stock is heavily owned by institutions, it doesn't leave much for =
other major investor's to buy and propel the stock higher. But if these =
companies continue to grow, heavy ownership should not create a problem.

=20


=20

Question


What is a level of institutional ownership you consider when buying a =
stock? If too many shares are already owned by institutional investors, =
can that hurt a stock's chances of rising?

 =20

Answer


It is hard to tell how much institutional ownership is too much. =
Therefore, you should place less weight on this factor. Rather, focus on =
the quality of ownership. You want to see at least a few of the better =
performing mutual funds owning the stock you are considering buying. In =
some cases, however, if too many shares are owned by institutional =
investors, this could be bad. That's because it represents large =
potential selling if anything goes wrong with the company or the general =
market.

=20

=20

=20

=20






  ----- Original Message -----=20
  From: Chazmoore@aol.com=20
  To: canslim@lists.xmission.com=20
  Sent: Thursday, August 15, 2002 11:11 PM
  Subject: Re: [CANSLIM] Inst Ownership


  Gentlemen, if I may guide this discussion back to it's beginning, I =
believe I was the one who pontificated that IBD/DGO recommends no more =
than 25% mutual fund ownership, because otherwise there would be =
inadequate institutional capacity left to buy the stock when it started =
to move. In my opinion they use mutual funds because they leave a paper =
trail, and the quality of investment skill can be measured. Other =
institutions, for example life insurance companies, are more difficult =
to evaluate.=20

  For most public companies, institutions own most of the outstanding =
float, maybe 80% to 90% (according to Yahoo). Since the bulk of the =
ownership cannot be evaluated as respects investment skill and success, =
WON hones in on that part that can be monitored; the mutual funds. He =
recommends mutual fund sponsorship, but for growth stocks, he likes to =
see the percentage of ownership at less than 25%, and the quality of =
mutual fund ownership, above average.=20

  But then, what do I know?=20

  Charley=20

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<DIV>Hi Charley et al,</DIV>
<DIV>&nbsp;</DIV>
<DIV>Mark Boucher (The Hedge Fund Edge)&nbsp;recommends in his work that =

institutional ownership (banks + mutual funds) runs 10-30%. WON seems to =
take a=20
more generalist view of the actual percentage and instead focuses on =
both the=20
<EM>quality</EM> of ownership and the fact that ownership is=20
<EM>increasing</EM>. As with Boucher, WON considers both mutual funds =
and banks=20
to be "institutional owners."</DIV>
<DIV>&nbsp;</DIV>
<DIV>A great place to check ownership is at:</DIV>
<DIV><A=20
href=3D"http://moneycentral.msn.com/investor/invsub/ownership/ownership.a=
sp?Symbol=3DSBUX">http://moneycentral.msn.com/investor/invsub/ownership/o=
wnership.asp?Symbol=3DSBUX</A></DIV>
<DIV>Then use either the IBD's Mutual Fund ratings or look up ratings at =
<A=20
href=3D"http://www.morningstar.com">www.morningstar.com</A> to take a =
look at=20
quality of ownership.</DIV>
<DIV>&nbsp;</DIV>
<DIV>-Katherine</DIV>
<DIV>&nbsp;</DIV>
<DIV>From AskIBD (highlighting is mine):</DIV>
<DIV>&nbsp;</DIV>
<DIV>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Question<?xml:namespace prefix =3D o ns =3D=20
"urn:schemas-microsoft-com:office:office" =
/><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">What percentage of a company's shares outstanding =
should be=20
owned by institutions in order for the stock to qualify as =
institutionally well=20
sponsored?<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Answer<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">It's not so much what percentage of a company's =
stock is=20
owned by institutions as the number of institutions that own it. You =
don't want=20
to see just one institution owning it. Any stock you consider purchasing =

<EM><FONT color=3D#0000ff>should be owned by at least a few mutual funds =
and=20
preferably one or more banks or other institutional =
investors</FONT></EM>. Also,=20
look for stocks owned by at least one top-rated mutual fund. The better =
funds=20
research companies extensively. So when they buy a stock, it serves as =
way to=20
cross-check how sound the company =
is.<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Question<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Can too much institutional sponsorship be a bad=20
thing?<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Answer<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">It depends on the company, their earnings and their =
products.=20
In theory, if a stock is heavily owned by institutions, it doesn't leave =
much=20
for other major investor's to buy and propel the stock higher. <FONT=20
color=3D#0000ff><EM>But if these companies continue to grow, heavy =
ownership=20
should not create a =
problem.<o:p></o:p></EM></FONT></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Question<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">What is a level of institutional ownership you =
consider when=20
buying a stock? If too many shares are already owned by institutional =
investors,=20
can that hurt a stock's chances of =
rising?<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;</FONT></FONT></SPAN><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes">&nbsp;</SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Answer<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><FONT color=3D#0000ff><EM>It is hard to tell how =
much=20
institutional ownership is too much. Therefore, you should place less =
weight on=20
this factor. Rather, focus on the quality of ownership. You want to see =
at least=20
a few of the better performing mutual funds owning the stock you are =
considering=20
buying.</EM></FONT> In some cases, however, if too many shares are owned =
by=20
institutional investors, this could be bad. That's because it represents =
large=20
potential selling if anything goes wrong with the company or the general =

market.<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes">&nbsp;</SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes">&nbsp;</SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">&nbsp;<o:p></o:p></FONT></FONT></SPAN></P></DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;</DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV=20
  style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
  <A title=3DChazmoore@aol.com=20
  href=3D"mailto:Chazmoore@aol.com">Chazmoore@aol.com</A> </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
  =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, August 15, 2002 =
11:11=20
  PM</DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Inst=20
  Ownership</DIV>
  <DIV><BR></DIV><FONT face=3Darial,helvetica><FONT size=3D2>Gentlemen, =
if I may=20
  guide this discussion back to it's beginning, I believe I was the one =
who=20
  pontificated that IBD/DGO recommends no more than 25% mutual fund =
ownership,=20
  because otherwise there would be inadequate institutional capacity =
left to buy=20
  the stock when it started to move. In my opinion they use mutual funds =
because=20
  they leave a paper trail, and the quality of investment skill can be =
measured.=20
  Other institutions, for example life insurance companies, are more =
difficult=20
  to evaluate. <BR><BR>For most public companies, institutions own most =
of the=20
  outstanding float, maybe 80% to 90% (according to Yahoo). Since the =
bulk of=20
  the ownership cannot be evaluated as respects investment skill and =
success,=20
  WON hones in on that part that can be monitored; the mutual funds. He=20
  recommends mutual fund sponsorship, but for growth stocks, he likes to =
see the=20
  percentage of ownership at less than 25%, and the quality of mutual =
fund=20
  ownership, above average. <BR><BR>But then, what do I know?=20
  <BR><BR>Charley</FONT> </FONT></BLOCKQUOTE></BODY></HTML>

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