What is the best way to check if institutional buyers are getting involved in a stock? (June 25, 2003)

  As intitutions (mutual funds, pension funds, insurance companies) control 70% of the money that is invested in the market, they are typically involved in many of the issued traded on the larger exchanges. They typically move in stocks that trade in excess of 100K shares per day so they can move in and out or accumulate or liquidate positions without impacting the stock price significantly. That is why we typically look for stocks that are trading in excess of 100K per day but we also look at the 75K and above crowd as well. That way you are pretty certain to be in stocks where institutions are trading.

We then judge if there is accumulation by looking at up weeks on rising volume versus down price weeks on rising volume. We compare and can determine if there is accumulation or distribution. We also look at sources such as Investor's Business Daily and its survey of top mutual funds to see what they have been buying, and Morningstar also compiles information on what funds own what stocks. If you know funds own the stocks, then you can apply that analysis of accumulation versus distribution to see if they are buying shares on whole or if they are net sellers of the stock.


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