The percentage of shares outstanding owned by institutions and by insiders are both important factors that should be considered by growth investors.
Strong institutional ownership means that these in-the-know investors have analyzed your candidate and liked what they saw. Conversely, low institutional sponsorship usually means that they know something that kept them from buying the stock.
Stocks with institutional ownership exceeding 40 percent of outstanding shares are your best bet. Avoid stocks if institutions hold less than 30 percent. In June 2000, institutional holdings amounted to 57 percent of Impath’s outstanding shares.
Excessive insider ownership is your biggest concern ...