Research into major/significant shareholders - and impact on SP?

[Muschu]

Hi

I am looking into how tightly held some stocks may be and how this could perhaps affect SP. On eTrade there is a drop-down box which seems to list all stockholders who hold more than 5% of a stock. This list may be individual or institutional holders.

However if this group owns, for example, 60% of a stock there may still be [in my understanding] others who own very large quantities of 4%, 3%, 2%, 1% .. whatever... and are not listed.

Is there any way of the general public knowing how much stock [below major shareholder level] is owned by "significant others" and even who they are?

If major and significant holders own, hypothetically, 90% of a stock then [no surprise] there is presumably only 10% available to "mum and dad" holders.

The next issue is that there then may be, if my argument is right so far, low volume trading in such a stock.

From there: Assume the stock is fundamentally sound and the company is meeting or exceeding expectiations-------- Is the fact that most of the shares are in so few hands likely to impede on the growth of the share price?
My own view is that it would do so but I may be totally wrong.....

Comments welcome.

Rick

 

[So_Cynical]

Re: Research into major / significant share-holders - and impact on SP?

Hi Rick
When im looking at a new stock, i always like to have at look at the top 20 holders, u will
usually find this info on the last few pages of the annual report.

In general i like company's that have a family history and or have management that are
significant holders....my thinking is that these types of company's are more likely to pay
dividends consistently and less likely to do Capital Raising's and off market share
placements...in fact less likely to do anything negative to shareholders.

Of course the trading volumes can be very light...and so to the market depth, and that
keeps (most) of the traders away so that the SP is less market driven and more reality
driven....good for people that want to hold shares, not churn shares.

Also consider that alot of company's that are tightly held, are also conservatively run
and have smallish market caps..so not considered by the blue chip/mum and dad investors
and there advisers.

 

[Muschu]

Thanks for the comments SC and I agree with your observations.
It's a tough time to be investing and I wonder how many companies fit the description you have given?
I'm pretty much retired and not into very speculative stocks although I don't mind a degree of risk.
I guess I'm wondering whether a stock can be TOO tightly held and, by being in this position, almost prevent SP growth?
Perhaps there is a minimum degree to which share ownership should be spread...
Don't know. Just thinking about it.... Seems not many others are .

 

[So_Cynical]

I guess I'm wondering whether a stock can be TOO tightly held and, by being in this position, almost prevent SP growth?
Perhaps there is a minimum degree to which share ownership should be spread...
Don't know. Just thinking about it.... Seems not many others are .

Its a 2 edged sword...any holder in a hurry to get out, will have to accept the best bid, and due to little market depth take the best offer which many times is well below the last sale...which may have been days, weeks or months ago.

However ive seen it work in the opposite way...with a gap up in the SP of over 20%...so if your a patient investor there's plenty of upside to.