DEFINITION of ‘Institutional Ownership’
The amount of a company’s available stock owned by mutual or pension funds, insurance companies, investment firms, private foundations, endowments or other large entities that manage funds on the behalf of others.
INVESTOPEDIA EXPLAINS’Institutional Ownership’
Stocks with a large amount of institutional ownership are often looked upon favourably. Large entities frequently employ a team of analysts to perform detailed and expensive financial research before the group purchases a large block of a company’s stock. This makes their decisions influential in the eyes of other potential investors.
Because of the investment made into research, institutions aren’t quick to sell their positions. When they do, however, it can be seen as a judgement on the stock’s value and drive down its price.
Institutions may also work to drive the share price higher once they own the stock. TV appearances, articles in high-profile publications and presentations at investor conferences help to move the stock higher, increasing the value of the position.