How many shares in how many hands?

May 30, 2010 6:11 PM

Is there a way to find out how many people own a stock?

I heard a rule that 80% of the money in the stock market is made by 20% of the people. So if I could figure out how many people own a stock, that would be interesting.

Or is there some other reliable way of telling when a stock is getting popular among ordinary people?

posted by philosophistry to Work & Money (6 answers total)

As for how many "common people" own a certain stock there is commonly listed an Institutional Ownership percentage. This percentage is calculated based on how many corporations, banks, investment firms, hedge funds, etc own the outstanding stock. For example GOOG is listed as 61% Inst. Own.
posted by msbutah at 6:17 PM on May 30, 2010

I would not want to discourage you too much from doing research, but I doubt you would find a relationship you describe holding up to statistical scrutiny. I would want to discourage you from buying or selling stocks based solely on the institutional ownership percentage.

Here is a fairly recent paper on the topic, though I dont know the authors and I just skimmed it, it seems well done enough. Here is part of the conclusion: "No significant relationships are found for either blockholders or institutions and
performance."

Some people have tried to track what the so called smart money is doing, for example what is John Paulson buying these days (California housing, of all things), through large traders mandatory reporting to the SEC.
posted by shothotbot at 7:25 PM on May 30, 2010 [1 favorite]

Most people who are "in the market" don't own stock, they own funds. As for what you're trying to do, forget it. It's obvious you don't know enough to even know what data to look for. Parlaying a sophistic market simplism into an actionable strategy? Mr. Market is ready to separate you from your money.
posted by ferdinand.bardamu at 7:28 PM on May 30, 2010 [1 favorite]

Funds that own more then 5% of a stock are required to file a disclosure with the SEC once a quarter. There are issues with using these as a trading metric. Read through the SEC disclosure laws if you want to know why, its good practice research. Other then that there are no reliable methods to tell who or how many people own a stock. There are some things you can do with quarterly fund disclosures but they suffer from similar issues.

I'll let you in on a big secret: institutional ownership stats reported by websites can be wildly off. Think +-20% margins of error if not bigger. They are essentially useless. (Why? Left as an exercise for the reader).

I'm actually going to disagree with everyone here. I think it is a fantastic thing that you are doing research. It is a track that will with lots of work let you do well. Just make sure you don't blindly believe in one of your ideas because you want to believe in your idea.
posted by An algorithmic dog at 12:20 AM on May 31, 2010

Response by poster: But is there a simple number, of how many investors own shares? Like Microsoft is held by 1,394,340 investors or something?
posted by philosophistry at 10:23 AM on May 31, 2010

Any number given would be meaningless and any meaningful number is impossible to determine. The way to do this would be to ask how many shareholders of record there are, but there's many intermediaries that make this useless -- for example, I own most of my shares by way of mutual funds. Given the size of my investment and the number of stocks in my index fund, I only fractions of a share of any given company. Even more confounding are mutual funds that invest in other mutual funds. This is where beginning 401/IRA investors seem to be directed if they have a low balance. All of this counts as institutional investing, but theoretically it's own by individuals and simply managed by institutions.
posted by pwnguin at 2:42 PM on May 31, 2010