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Fire Your Stock Analyst!: Analyzing Stocks On Your Own, Second Edition by Harry Domash

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13. Analysis Tool #10: Ownership Considerations

Examining the percentage of outstanding shares held by institutions and insiders can help you avoid risky stocks.

Institutional Ownership

Institutions are mutual funds, pension plans, trust funds, and other large investors, and they account for roughly 50 percent of all stockholdings. The presence of strong institutional sponsorship (large holdings) verifies that a stock is a viable growth candidate.

Institutional Percentage of Shares Outstanding

Institutional ownership is the percentage of outstanding shares held by institutions. Hedge funds are not required to report their holdings to the SEC and thus are not counted as institutional owners.

Institutions trade stocks frequently and in large ...

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