Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] How important is low Institutional Ownership?
Date: Fri, 21 Mar 2003 06:23:52 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_0010_01C2EF72.714EB910 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Chris, the topic of institutional ownership is complex, in part because = there are many different types of "institutional" owners with different = investing objectives, and because different data sources count the = ownership in different ways. Institutions include not only mutual funds, but also pension funds, = insurance companies, banks, venture capitalists, and even individual = owners, all of whom have large capital to invest. Some will do = exhaustive due diligence, and invest in early stages, and be there for = years. Others, like mutual funds, may move in and out rather quickly. Different data sources also count this ownership in different ways. Some = disregard venture capitalists entirely, due difficulty in obtaining = information if their holdings are not over 5% of the issue. Others show = institutional ownership as a collective total without breaking it down = into the different types. Even the percentage is calculated differently = from site to site, some do it as a percentage of the issue, while others = like DGO do it as a percentage of the float. In this latter case, this = can make a big difference if management owns 50% of the issue, thus = doubling institutional percentages when taken as a %age of the remaining = float. That said, it is most important, if institutional ownership is a = significant factor in your decision making, to find a data source you = like, and stick with it. Try to learn how they count the numbers, not = just on this issue but many others. You need consistent information, = even if it is different than what some other site may present. I use DGO exclusively for this topic, where it shows me the %age = Management owns of the issue, and also the %age that mutual funds and = banks own of the remaining float. Mostly, I disregard banks, focusing = only on mutual funds, where I find they are the quickest to move in and = out, often for no apparent reason. Most funds hide their activity, only = showing holdings at the end of the quarter, after the "window dressing". = Some will show the cost basis of a holding, with that and a chart you = can get an idea how long they owned the position. None that I know of = give out a "purchase and sale" report for the quarter, which I think = they should be required to provide. Because I only buy small companies that most have not heard of, and = often with very limited liquidity, I will normally steer clear of any = stocks with more than a 20% ownership of the float by the mutual funds. = I am not put off by zero fund ownership. EPIQ, which I currently own and = has done very well for me, shows 23% Management ownership, 27% funds and = 20% banks. But contrast that with FWHT, which I also own, with 66% = Management ownership, and only 7% funds, 0% banks, and has more than = doubled for me in the past year. The generally accepted rule for CANSLIM is 20% funds ownership, WON = seems to be vague on the other types of institutional ownership. - ----- Original Message -----=20 From: Chris Jones=20 To: CANSLIM=20 Sent: Friday, March 21, 2003 3:41 AM Subject: [CANSLIM] How important is low Institutional Ownership? I believe strict CANSLIM guidelines state that a stock should have 2% - = 30% institutional ownership. However, it seems that a majority of the = high quality stocks that I find, that meet CANSLIM guidelines in every = other way, have more than 30% institutional ownership. Often they have = 60-95% ownership. Apparently, the fear is that if something happens, = the institutional owners can become a large source of supply, dumping = the stock. However, to me it seems that whether it's 30% or 80%, both = will be a large source of supply. What have your experiences been with = good CANSLIM stocks that have a higher than 30% institutional ownership? = Should they be avoided? - ------=_NextPart_000_0010_01C2EF72.714EB910 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2800.1141" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial>Chris, the topic of institutional ownership is = complex, in=20 part because there are many different types of "institutional" owners = with=20 different investing objectives, and because different data sources count = the=20 ownership in different ways.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Institutions include not only mutual funds, but = also=20 pension funds, insurance companies, banks, venture capitalists, and even = individual owners, all of whom have large capital to invest. Some will = do=20 exhaustive due diligence, and invest in early stages, and be there for = years.=20 Others, like mutual funds, may move in and out rather = quickly.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Different data sources also count this ownership = in=20 different ways. Some disregard venture capitalists entirely, due = difficulty in=20 obtaining information if their holdings are not over 5% of the issue. = Others=20 show institutional ownership as a collective total without breaking it = down into=20 the different types. Even the percentage is calculated differently from = site to=20 site, some do it as a percentage of the issue, while others like DGO do = it as a=20 percentage of the float. In this latter case, this can make a big = difference if=20 management owns 50% of the issue, thus doubling institutional = percentages when=20 taken as a %age of the remaining float.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>That said, it is most important, if = institutional=20 ownership is a significant factor in your decision making, to find a = data source=20 you like, and stick with it. Try to learn how they count the numbers, = not just=20 on this issue but many others. You need consistent information, even if = it is=20 different than what some other site may present.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>I use DGO exclusively for this topic, where it = shows me=20 the %age Management owns of the issue, and also the %age that mutual = funds and=20 banks own of the remaining float. Mostly, I disregard banks, focusing = only on=20 mutual funds, where I find they are the quickest to move in and out, = often for=20 no apparent reason. Most funds hide their activity, only showing = holdings at the=20 end of the quarter, after the "window dressing". Some will show the cost = basis=20 of a holding, with that and a chart you can get an idea how long they = owned the=20 position. None that I know of give out a "purchase and sale" report for = the=20 quarter, which I think they should be required to provide.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Because I only buy small companies that most = have not=20 heard of, and often with very limited liquidity, I will normally steer = clear of=20 any stocks with more than a 20% ownership of the float by the mutual = funds. I am=20 not put off by zero fund ownership. EPIQ, which I currently own and has = done=20 very well for me, shows 23% Management ownership, 27% funds and 20% = banks. But=20 contrast that with FWHT, which I also own, with 66% Management = ownership, and=20 only 7% funds, 0% banks, and has more than doubled for me in the past=20 year.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>The generally accepted rule for CANSLIM is 20% = funds=20 ownership, WON seems to be vague on the other types of institutional=20 ownership.</FONT></DIV> <DIV> </DIV> <DIV style=3D"FONT: 10pt arial">----- Original Message -----=20 <DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20 title=3DSwingKid104@attbi.com = href=3D"mailto:SwingKid104@attbi.com">Chris Jones</A>=20 </DIV> <DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20 href=3D"mailto:canslim@lists.xmission.com">CANSLIM</A> </DIV> <DIV><B>Sent:</B> Friday, March 21, 2003 3:41 AM</DIV> <DIV><B>Subject:</B> [CANSLIM] How important is low Institutional=20 Ownership?</DIV></DIV> <DIV><BR></DIV> <DIV><FONT face=3DArial size=3D2>I believe strict CANSLIM guidelines = state that a=20 stock should have 2% - 30% institutional ownership. However, = it seems=20 that a majority of the high quality stocks that I find, that meet = CANSLIM=20 guidelines in every other way, have more than 30% institutional = ownership. =20 Often they have 60-95% ownership. Apparently, the fear is that if=20 something happens, the institutional owners can become a large source of = supply,=20 dumping the stock. However, to me it seems that whether it's 30% = or 80%,=20 both will be a large source of supply. What have your = experiences=20 been with good CANSLIM stocks that have a higher than 30% institutional=20 ownership? Should they be avoided?</FONT></DIV></BODY></HTML> - ------=_NextPart_000_0010_01C2EF72.714EB910-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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