How to Find Stocks With High Institutional Buying

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Institutions—pension funds, mutual funds, endowments and investment banks—hold about 70 percent of all listed stocks on U.S. exchanges. An investment axiom holds that retail investors can improve returns on their own investments by favoring those equities with high institutional buying. This is generally, but not always true.

Investors Daily

Step 1

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Read the Investor's Business Daily newspaper to find stocks with strong institutional support. Two related lists tell the story. "Where the Big Money's Flowing" appears at the top of the stock tables and indicates which stocks have had the largest recent volume increases. Since institutional buying dominates the market, a stock with increased volume has strong institutional support. Another column, "accumulation/distribution," shows, for every stock listed in the paper's daily stock tables, a ranking from A through E. Stocks ranked "A" have had the most institutional buying in the previous 13 weeks.

Step 2

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Go to: http://www.nasdaq.com/symbol/ndaq/institutional-holdings to find daily reports on institutional holdings for any stock listed on either the NASDAQ or the New York Stock Exchange. Enter up to 25 stock symbols at a time to receive detailed daily information on these stocks, including percentage of institutional shareholders and a summary of activity: the number of new institutional buyers, buyers with increased positions, buyers with decreased positions and sold out positions. You can save reports for 25 stocks and return to the site for updates.

Step 3

Go to your online broker's research section for find stocks with high institutional support and recent volume increases. While the details may vary slightly from broker to broker, the process is similar.

References

About the Author

I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.

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