I know it’s a good thing when insiders hold a significant portion of stock! However, if you’re making a pros/cons on a particular security, what are you thoughts on a stock where: Institutional Ownership = 80% Insider Ownership = 13% That leaves 7% for the entire market… Is this high of ownership a good/buy thing??? Thank you!
From corporate goverance stand point, 80% institutional ownership is a good thing since they will keep an eye on the management.
So all in all, 90%+ insider/institutional owernship is a good thing–majority of the time?
ustcer Wrote: ------------------------------------------------------- > From corporate goverance stand point, 80% > institutional ownership is a good thing since they > will keep an eye on the management. Does it mean that? For instance, ownershipp by index funds is institutional ownership and they don’t give a darn. It seems to me that who exactly owns it might be important, but just institution/individual is not so important. There’s probably empirical work on it because it is easy and cheap data to get.
Even if the reason for ownership is indexing, mutual funds do a good job of researching proxies and board members.
its like sex, you want some, but not too much Mgmt with too much stock makes it harder to take em out, with too little, they dont have enough invested with joe 6 pack.
Adding to what JD said, it isn’t so much the level of institutional ownership but the number of institutional owners. A high institutional ownership concentrated among a few owners is much more likely to lead to a short squeeze than a widely held member of an index. As the ownership gets concentrated it is more likely the institutions become either insiders or quasi insiders and are unable to sell their shares and liquidiity in the security is reduced.
Good point sailor! Thank you!
daj224 Wrote: ------------------------------------------------------- > its like sex, you want some, but not too much > Sleeping and eating are also important.