RE: [CANSLIM] Inst Ownership

From: "Kelly Short" <kelly.short@tx.us.neoris.com>
Subject: RE: [CANSLIM] Inst Ownership
Date: Fri, 16 Aug 2002 09:56:46 -0500
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Katherine,
=20
I've used Morningstar's Mutual Fund ratings before and often wondered =
how these ratings were accepted by the group. Have you found their =
ratings to be helpful/accurate and do you weigh IBD's or another =
sources' rating on mutual funds over Morningstar's? Also, seems like I =
remember someone slamming "The Hedge Fund Edge" book a while back- would =
you recommend this book for a reading list?

- -----Original Message-----
From: Katherine Malm [mailto:kmalm@earthlink.net]
Sent: Thursday, August 15, 2002 11:44 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Inst Ownership


Hi Charley et al,
=20
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."
=20
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.
=20
- -Katherine
=20
>From AskIBD (highlighting is mine):
=20

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

=20
=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

  _____ =20

For your protection, this e-mail message has been scanned for viruses.=20

Visit us at http://www.neoris.com/=20

  _____ =20





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<DIV><SPAN class=3D090065514-16082002><FONT face=3DArial color=3D#0000ff =

size=3D2>Katherine,</FONT></SPAN></DIV>
<DIV><SPAN class=3D090065514-16082002><FONT face=3DArial color=3D#0000ff =

size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D090065514-16082002><FONT face=3DArial color=3D#0000ff =
size=3D2>I've=20
used Morningstar's Mutual Fund ratings before and often wondered how =
these=20
ratings were accepted by the group. Have you found their ratings to be=20
helpful/accurate and do you weigh IBD's or another sources' rating on =
mutual=20
funds over Morningstar's? Also, seems like I remember someone slamming =
"The=20
Hedge Fund Edge" book a while back- would you recommend this book for a =
reading=20
list?</FONT></SPAN></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
  <DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
  size=3D2>-----Original Message-----<BR><B>From:</B> Katherine Malm=20
  [mailto:kmalm@earthlink.net]<BR><B>Sent:</B> Thursday, August 15, 2002 =
11:44=20
  PM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> Re: =
[CANSLIM]=20
  Inst Ownership<BR><BR></FONT></DIV>
  <DIV>Hi Charley et al,</DIV>
  <DIV>&nbsp;</DIV>
  <DIV>Mark Boucher (The Hedge Fund Edge)&nbsp;recommends in his work =
that=20
  institutional ownership (banks + mutual funds) runs 10-30%. WON seems =
to take=20
  a more generalist view of the actual percentage and instead focuses on =
both=20
  the <EM>quality</EM> of ownership and the fact that ownership is=20
  <EM>increasing</EM>. As with Boucher, WON considers both mutual funds =
and=20
  banks 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<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=20
  well 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=20
  want to see just one institution owning it. Any stock you consider =
purchasing=20
  <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>.=20
  Also, look for stocks owned by at least one top-rated mutual fund. The =
better=20
  funds research companies extensively. So when they buy a stock, it =
serves as=20
  way to cross-check how sound the company=20
  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=20
  products. In theory, if a stock is heavily owned by institutions, it =
doesn't=20
  leave much for other major investor's to buy and propel the stock =
higher.=20
  <FONT color=3D#0000ff><EM>But if these companies continue to grow, =
heavy=20
  ownership should not create a=20
  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=20
  when buying a stock? If too many shares are already owned by =
institutional=20
  investors, can that hurt a stock's chances of=20
  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=20
  on this factor. Rather, focus on the quality of ownership. You want to =
see at=20
  least a few of the better performing mutual funds owning the stock you =
are=20
  considering buying.</EM></FONT> In some cases, however, if too many =
shares are=20
  owned by institutional investors, this could be bad. That's because it =

  represents large potential selling if anything goes wrong with the =
company or=20
  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>=
=20
    </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=20
    buy the stock when it started to move. In my opinion they use mutual =
funds=20
    because they leave a paper trail, and the quality of investment =
skill can be=20
    measured. Other institutions, for example life insurance companies, =
are more=20
    difficult to evaluate. <BR><BR>For most public companies, =
institutions own=20
    most of the outstanding float, maybe 80% to 90% (according to =
Yahoo). Since=20
    the bulk of the ownership cannot be evaluated as respects investment =
skill=20
    and success, WON hones in on that part that can be monitored; the =
mutual=20
    funds. He recommends mutual fund sponsorship, but for growth stocks, =
he=20
    likes to see the percentage of ownership at less than 25%, and the =
quality=20
    of mutual fund ownership, above average. <BR><BR>But then, what do I =
know?=20
    <BR><BR>Charley</FONT> </FONT></BLOCKQUOTE>
  <HR>
  For your protection, this e-mail message has been scanned for viruses. =

  <P>Visit us at <A =
href=3D"http://www.neoris.com/">http://www.neoris.com/</A>=20
  <HR>

  <P></P></BLOCKQUOTE></BODY></HTML>

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