RE: [CANSLIM] Institutional Ownership

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Institutional Ownership
Date: Mon, 12 May 2003 02:23:45 -0500
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Hi Duane,

I'll have to be honest and say "no." I've researched WON's writings on this for
some time and my conclusion is that he believes that there isn't any particular
percentage ownership that is "good" or "bad." My general take is that he is far
more interested in the *trend* of ownership, the "quality" of ownership and the
fact that there are "at least a few " institutional owners. All that is just a
general indication that the underlying business is attractive enough that the
big boys want in on the act. In general, WON seems to focus more on mutual fund
ownership than that larger generic "institutional ownership" grouping that so
many web sites feature. That makes it a tough measurement unless you have access
to DGO data, where their analysts are able to break down the numbers into more
meaningful sub groupings of institutional owners.

Another thing to consider is that percentage ownership changes depending on how
many shares are outstanding and/or in the float. Companies change their equity
structure constantly either by issuing more shares in primary offerings,
retiring stock, issuing more debt, etc. When it boils down to it, the
price/volume action and fundamental track record is far more meaningful.

While I'm much more interested in the technical and fundamental condition of the
stock than I am in an iffy measurement like this, that's not true of all
CANSLIMers. For example, Mark Boucher, who is a CANSLIMer at heart (though he
has his own approach based on those roots), limits his candidates to those with
10-30% ownership. Maybe when you're running a billion dollar hedge fund that's a
big deal, but for the rest of us, I'm not sure that it makes much difference.

At the same time, while I say I don't pay much attention to percentage
ownership, I *do* tend to prefer "undiscovered gems." I click my heals when I
find a new company that's never crossed my radar and that I've never seen
mentioned in an article. For the most part, those *tend* to have low
institutional ownership, but that's not what draws me to them in the first
place.

Katherine
  -----Original Message-----
  From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Duane Runnels
  Sent: Monday, May 12, 2003 1:03 AM
  To: canslim@lists.xmission.com
  Subject: [CANSLIM] Institutional Ownership


  Katherine,

  While I understand "I" is not a deal breaker, is there some level of
institutional or Mutual Fund ownership that would scare you from buying a
particular stock?  For instance, tonight I was looking at some prospects, but
shied away from them when I saw IO > 80%.
  Thanks for your perspective and thoughtful insight.

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<DIV><SPAN class=3D000040507-12052003>Hi Duane,</SPAN></DIV>
<DIV><SPAN class=3D000040507-12052003></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D000040507-12052003>I'll have to be honest and say =
"no." I've=20
researched WON's writings on this for some time and my conclusion is =
that he=20
believes that there isn't any particular percentage ownership that is =
"good" or=20
"bad." My general take is that he is far more interested in the *trend* =
of=20
ownership, the "quality" of ownership and the fact that there are "at =
least a=20
few " institutional owners. All that is just a general indication that =
the=20
underlying business is attractive enough that the big boys want in on =
the act.=20
In general, WON seems to focus more on mutual fund ownership than that =
larger=20
generic "institutional ownership" grouping that so many web sites =
feature. That=20
makes it a tough measurement unless you have access to DGO data, where =
their=20
analysts are able to break down the numbers into more meaningful sub =
groupings=20
of institutional owners.</SPAN></DIV>
<DIV><SPAN class=3D000040507-12052003></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D000040507-12052003>
<DIV><SPAN class=3D000040507-12052003>Another thing to consider is that =
percentage=20
ownership changes depending on how many shares are outstanding and/or in =
the=20
float. Companies change their equity structure constantly either by =
issuing more=20
shares in primary offerings, retiring stock, issuing more debt, etc. =
When it=20
boils down to it, the price/volume action and fundamental track record =
is far=20
more meaningful.</SPAN></DIV></SPAN></DIV>
<DIV><SPAN class=3D000040507-12052003></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D000040507-12052003>While I'm much more interested in =
the=20
technical and fundamental condition of the stock than I am in an iffy=20
measurement like this, that's not true of all CANSLIMers. For example, =
Mark=20
Boucher, who is a CANSLIMer at heart (though he has his own approach =
based on=20
those roots), limits his candidates to those with 10-30% ownership. =
Maybe when=20
you're running a billion dollar hedge fund that's a big deal, but for =
the rest=20
of us, I'm not sure that it makes much difference.</SPAN></DIV>
<DIV><SPAN class=3D000040507-12052003></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D000040507-12052003>At the same time, while I say I =
don't pay=20
much attention to percentage ownership, I *do* tend to prefer =
"undiscovered=20
gems." I click my heals when I find a new company that's never crossed =
my radar=20
and that I've never seen mentioned in an article. For the most part, =
those=20
*tend* to have low institutional ownership, but that's not what draws me =
to them=20
in the first place.</SPAN></DIV>
<DIV><SPAN class=3D000040507-12052003></SPAN><SPAN=20
class=3D000040507-12052003></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D000040507-12052003>Katherine</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>=20
  owner-canslim@lists.xmission.com=20
  [mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Duane=20
  Runnels<BR><B>Sent:</B> Monday, May 12, 2003 1:03 AM<BR><B>To:</B>=20
  canslim@lists.xmission.com<BR><B>Subject:</B> [CANSLIM] Institutional=20
  Ownership<BR><BR></FONT></DIV>
  <DIV><STRONG><FONT face=3DArial =
size=3D2>Katherine,</FONT></STRONG></DIV>
  <DIV><STRONG><FONT face=3DArial size=3D2></FONT></STRONG>&nbsp;</DIV>
  <DIV><STRONG><FONT face=3DArial size=3D2>While I understand "I" is not =
a deal=20
  breaker, is there some level of institutional or Mutual Fund ownership =
that=20
  would scare you from buying a particular stock?&nbsp; For instance, =
tonight I=20
  was looking at some prospects, but shied away from them when I saw IO =
&gt;=20
  80%.</FONT></STRONG></DIV>
  <DIV><STRONG><FONT face=3DArial size=3D2>Thanks for your perspective =
and=20
  thoughtful insight.</FONT></STRONG></DIV></BLOCKQUOTE></BODY></HTML>

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