I was doing some research on something totally unrelated, tax stocks, when I discovered that institutions and mutual funds own 98% of the float and 98% of the shares of Jackson Hewitt Tax Service (JTX). I thought that was an extremely high percentage. Do individual investors own only 2% of the JTX shares?
I decided to do some further research and found some other very high percentage ownerships. For example, Qwest Communications International (Q) has 90% of the shares owned by institutions, including mutual funds, and 107% of the float owned by institutions. Alleghany Corp. (Y) has 65% of its shares and 103% of the float owned by institutions. Look at Shaw Group (SGR). Institutions own 97% of the shares and 118% of the float.
Now for the most amazing ownership percentages. Avid Technology Inc. (AVID) has 112% of the float owned by institutions and 104% of the total shares owned by institutions. How is this possible? How can institutions own over 100% of the shares? Other than a calculation error, there seems to me to be only a couple ways this could happen. If there is no double counting involved, then either some of the institutions own shares on margin and/or there are naked short sellers that are shorting shares that don't exist. I am tracking these shares on stockpickr.com to see if there is any effect of the high institutional ownership on the stock price.
If you are aware of any other very high institutional ownership stocks, please post in the comments.
Author does not own any of the above.
5 comments:
I know of another stock....it is..ARDNA. They own gelsons. Please let me know what you think of this.
thanks..matt
Arden has only 17% of its shares owned by institutions.
There is such a thing known as
Naked Shorts. This practise is illegal.
However, rarely noticed or inforced.
Used mostly by Hedge Funds.
This comment is in response to "There is something Strange about Ownership of these stocks"
I think it's pretty simple...many institutional managers hold stocks on behalf of their clients, who in turn participate in their custodians' securities lending programs. This can create artificial float.
Here's an admittedly absurd, but simple, illustration.
IM#1 loves XXXX, and buys the whole 1M share float for its institutional clients, 50% of whom get income from having their securities loaned.
IM#2 hates XXXX, and shorts 500K legitimately to IM#3 who also loves it. When it comes time to do the SEC 13F, IM#1 reports 1M, and IM#3 reports 500K, adding up to 150% of the float. IM#1 has no idea that IM#3 actually owns 1/2 of IM#1's position, and if any dividends are paid, they go to IM#3, and IM#2 as the short is responsible for making IM#1 (and clients) whole.
What about short positions, you may ask. Per the SEC, they are not reported and they are not netted. See Question #41 on this page.
http://www.sec.gov/divisions/investment/13ffaq.htm
There are three effects here. The first is the effect of shorting, as pointed out by Gary and Linda. Most of the shorting is legitimate, and not naked.
When managers post their 13F filings, they don't deduct the shares that are out on loan. Similarly, managers that have had shares shorted to them do not deduct them their holdings (should they even notice this) when reporting on their 13F.
The second effect comes from differences in timing. 13Fs have to be done on a regular basis, but 13G and 13D filings as the need arises. Form 4 filings come annually, and as transactions are made. Some shareholder data only gets mentioned when the proxy comes out.
Further, share counts are slowly updated for buybacks and issuances. Some data is stale at almost any transaction date.
A third reason: sometimes beneficial interests get double counted. The Father controls the trust, and the son has a beneficial interest. If one is not careful, double counting can occur.
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