Financial institutions — such as investment funds and insurance companies — are the large players in the stock market. They buy thousands, sometimes millions, of shares in a single stock. High institutional buying occurs when the number of shares that institutions own in a stock increases by a significant percentage (typically 25 percent or more). A stock with high institutional buying isn’t necessarily a sure bet, but the extra demand for shares can potentially boost its price. You can find stocks with high institutional buying using an online stock screener. This tool searches for stocks that match your specified criteria.
Visit a financial website — such as The Wall Street Journal, Finviz.com or Fidelity.com — that provides a stock screener with a change-in-institutional-ownership search parameter. Not all stock screeners offer this feature.
Find the change-in-institutional-ownership parameter among the screener’s search criteria. Click it to add it as a search function. This parameter might be called “institutional transactions,” “percent change in institutional ownership” or something similar.
Click the drop-down arrow in the box next to the search parameter’s name. This reveals a list of selections that describe the change in the stock’s institutional ownership between the two most recent quarters.
Click one of the options on the list that indicates a growth in institutional ownership of at least 25 percent, such as “greater than 25 percent” or “greater than 40 percent.” Any amount of increase indicates institutional buying, but one above 25 percent can potentially create more upward price momentum. In this example, assume you want to find stocks with an institutional ownership increase of more than 50 percent. Click “greater than 50 percent” on the drop-down menu.
Click “View Results” to pull up a list of stocks that match your criteria, unless the screener automatically produces one. This list displays one stock per row. The columns show various information about the stock, including the actual percent change in institutional ownership. In this example, the list shows only stocks in which the number of shares held by institutions grew by more than 50 percent between the two most recent quarters.
Click the “percent change in institutional ownership” column heading to sort the list by that information. This puts the stocks with the most institutional buying at the top of the list. Click a stock to find out more details, such as the percentage of outstanding shares owned by each institution and the percentage owned by all institutions.
- On some screeners, you must select the number of shares institutions bought in Step 4 instead of the percentage growth in ownership. Choose the highest available number of shares purchased, such as “greater than 500,000.”
- Avoid relying only on institutional ownership information when buying stocks. Always review a company’s other information before picking up shares.
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