A company I recently looked up showed institutional holdings of more than 100%. How is this possible?

By Richard Loth AAA
A:

It is obviously not technically possible for any shareholder or category of shareholder to hold more than 100% of a company's outstanding shares. Therefore, when you see investment information websites reporting institutional holdings exceeding the 100% mark, something is wrong with the data. There are two likely sources that are responsible for the reporting errors.

First, the figures in an institution's report correspond to an "institutional holdings date". These can differ somewhat among the various institutions holding a company's stock, resulting in differences that could impact the reported percentage for institutional holdings. The data presented is updated monthly with an approximate lag of four weeks. As a result, even a slight imprecision in the reporting dates among one or more institutions could throw off the count.

Second, we checked with Ownership Analyzer, which provides data on institutional investors' holdings. Here's our summary of their take on the most likely cause of distorted institutional holdings percentages:

Let's say that XYZ Company has 20 million shares outstanding and Institution A owns all 20 million. In a shorting transaction, Institution B borrows 5 million of these shares from Institution A and sells them to Institution C. If both A and C claim ownership of the shares shorted by B, the institutional ownership of XYZ could be reported as 25 million shares (20 + 5), or 125% (25/20).

In cases where reported institutional ownership exceeds 100%, actual institutional ownership would have to be very high. While somewhat imprecise, this conclusion helps investors determine the degree of the impact that institutional purchases and sales could have on a company's stock.

For more insight, read Institutional Investors And Fundamentals: What's The Link?

RELATED FAQS

  1. Can I still set up an SEP if one of my employees refuses to participate?

    You can establish the SEP IRA, even if the employee refuses to participant. However, you would need to establish an IRA for ...
  2. I get multiple mailings to my house from companies that my spouse, children and I ...

    It's not uncommon for there to be more than one investment account holder in one household. If multiple members of your household ...
  3. I have a small business, and I'm considering setting up an SEP IRA. What are leased ...

    Generally, a leased employee is the employee of an outside organization from which you lease the employee's services. For ...
  4. If a company undergoes an acquisition can an employee withdraw 401(k) funds tax free?

    Although the participant may be eligible to withdraw the funds if a plan is terminated as a result of an acquisition or other ...
RELATED TERMS
  1. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  2. Registered Holder

    Shareholders who hold their shares directly with a company.
  3. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
  4. Duty Of Care

    One of two primary fiduciary duties of directors, the duty of ...
  5. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  6. Adverse Domination

    A legal doctrine that allows regulators to bring litigation against ...
Related Articles
  1. Using Appreciative Inquiry To Solve ...
    Investing Basics

    Using Appreciative Inquiry To Solve ...

  2. The Basics Of Value Chain Analysis
    Investing Basics

    The Basics Of Value Chain Analysis

  3. Top Tools for ERP Enterprise Resource ...
    Investing Basics

    Top Tools for ERP Enterprise Resource ...

  4. Analysis of Companies with high goodwill
    Investing Basics

    Analysis of Companies with high goodwill

  5. Starbucks As An Example Of The Value ...
    Investing News

    Starbucks As An Example Of The Value ...

Trading Center