Institutional ownership is the percentage of a stock’s float owned by institutions such as mutual funds, pension funds and endowments. Float is the percentage of issued and outstanding shares that can be freely traded, unlike locked-up insider holdings or restricted employee shares. Institutional ownership is usually beneficial to a stock price initially, but very high institutional ownership has several disadvantages.
Initial increases in institutional ownership usually benefit a stock. Institutional buying can push up the stock price. Institutions tend to support prices of the stocks they own by stepping up buying whenever a stock price sags, adding stability to the stock. Institutional ownership also lends credibility to the company story. Attracted by the price rise and encouraged by favorable institutional opinions, retail investors start buying as well.
Institutional ownership can eventually exceed 100 percent of float, which means that, in addition to all the available shares, institutions have also bought up all the borrowed shares from short sellers who are betting that the stock will decline. These high levels of institutional ownership are unsustainable and pose several disadvantages for retail investors.
Red Hat Inc (NYSE:RHT) institutional ownership was 96.40%. The stock has the market capitalization of $14.16 billion while it’s 183.48 million shares were outstanding. The price to sale ratio was 7.67. Net profit margin of the company was 10.30% while operating profit margin as 14.60%. Stock volatility for the month was 1.61% while for the week was 1.92%.
With 92.20% institutional stake, American Homes 4 Rent (NYSE:AMH) has the market capitalization of $3.37 billion while its 211.49 million shares were outstanding. Net profit margin of corporation was -15.70%. Shares of company were moving below of 50 days simple moving average with -3.39% while 200 days simple moving average with -4.75%.
Hilton Worldwide Holdings Inc (NYSE:HLT) institutional ownership is held at 97.00% while inside ownership was 1.10%. The company has the market capitalization of $26.17 billion. Its EPS was $0.71 while outstanding shares of the company were 987.45 million. The Company’s Net profit margin was 6.50%. The company earned $700.00 million in prior twelve months on revenue of $10.74 billion.
Lam Research Corporation (NASDAQ:LRCX) has the market capitalization of $11.95 billion while 158.33 million shares were outstanding. Beta factor, which is used to measure risk associated with the stock, was 1.41. Return on equity was booked as 15.10% while return on assets was 9.10%. The stock’s institutional ownership stands at 96.70%.