Shareholding pattern can provide you enough clues about a stock. Smart investors often look for things high public shareholding pattern reflects in stocks. It helps them to make right positions to gain profits as quick as possible.
A small retail investor is an individual investor that is involved in buying & selling securities for their personal account. On the other hand, an institutional investor or high-net worth investor is someone who trades shares for a living at a bank or other financial institution.
According to U.S. Securities and Exchange Commission (SEC), high net worth investor is someone that has at least $750,000 in invested assets.
Small investor’s participation in shares or securities can be considered as a catalyst that could drive markets even higher.
However, small retail investors have developed a dubious reputation purchasing high, selling low, as well as jumping in & jumping out of markets at exactly the wrong time.
Smart & sophisticated traders always look for type of traders, proportion of their stake as well as other indicators. This helps them to make positions in the right direction at right time. Here are 14 key indications of high retail participation in stocks:
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(1) Diminishing Confidence Of Promoters
It is one of the best things high public shareholding pattern reflects in stocks. According to Investopedia, promoters are individuals or entities that help to raise money for some type of investment activity.
They are usually paid in company stock or offered free entrance into investment activity as compensation for performing their work.
They are one of the first persons to know almost everything about the business operations of a company. They are well aware of current & future projects, technical & competitive hurdles as well as profit margins of company.
A high retail participation in stocks corresponds to very low stake of promoters. It is usually perceived as diminishing confidence of promoters in the company & its business operations.
It is sufficient reason to raise doubts over reputation of a company. Investors & traders are advised to analyze shareholding pattern in-depth before going for stock investment.
Thus, it is rightly said that a good & confident management can uplift a bad company while a bad management can ruin a good company.
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