The percentage of common shares owned by mutual funds. It is derived by dividing the aggregate number of company shares owned by mutual funds by the total shares outstanding and multiplying by 100.
Benefit
A high % fund ownership figure can be an indication of the market’s overall belief in the value of a stock. Conversely, a low % fund ownership figure can indicate that the stock has not proven to be worthy of its valuation.
Origin
This information is calculated using the latest portfolio for each mutual fund included in Morningstar’s mutual-fund database. The company’s total shares outstanding is found in the company’s most recent 10-K report.
For the Pros
Because mutual funds regularly control large pools of money, they often buy a particular stock in large quantities. This can be important for two reasons:
The purchase of a particular company’s stock by a number of mutual funds can indicate the market’s overall belief in the valuation of the stock.
Mutual funds have a tendency to purchase large amounts of a company’s stock. This not only leaves a smaller pool of common stock available to other investors, it may also represent an undue ability for that stock’s valuation in the market to be affected by the performance of a relative handful of individuals.