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CHAPTER 17 Stock Research Checklist—Inst... > Does the Company Have a Small Percen...

Does the Company Have a Small Percentage of Institutional Ownership?

You need to look for a company that has a low institutional holding because institutions mean bigger hedge funds and mutual funds. These institutions act in lemming-like patterns. All these hedge fund and mutual fund managers work to intimidate one another. If any one of the bigger hedge funds or mutual funds starts dumping a particular stock in a certain industry, everyone will try to do the same. Because these fund managers own vast amounts of stock, when all of them start dumping it, the stock drops very quickly. That is what happened during the recent financial crisis. When Lehman Brothers failed, a great many hedge fund and mutual fund managers started selling all kinds of stocks at the same time, especially financial stocks. There wa....


  

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