NAIC recommends avoiding stocks where Institutional
Ownership exceeds 80%.

Conundrum: I've noticed that several stocks selected for the
Stock to Study as well as stocks recommended by the NAIC
Investor Advisory Service (IAS) exceed this percentage.

While I realize that every rule has exceptions, what sort of
criteria do other clubs use in determining if an exception
is warranted?

Thanks,

Nick

Hey Nick,

NAIC is a great organization, but they are definitely known for their
inconsistency! <G> It's not avoiding stocks with high institutional
ownership that NAIC recommends, but rather, looking for stocks with minimal
(under 50%) ownership, as they assume these are undiscovered companies with
plenty of upside potential.

In my view, the age of instant information has made that whole mindset
obsolete--not just for us but for mutual fund managers, as well.

For me and my club, we don't worry about ownership. Unless we want to start
buying speculative issues, we'll always have to deal with institutions who
find the good stocks before we do. Therefore, we use the volatility
created by the "lemmings" on Wall Street to afford us the chance to buy on
the dips.

Lynn Ostrem, Minneapolis
garbagecop@foxinternet.net
www.bivio.com/crowriver

The mechanics of corporate finance leave very little of the upstarts to
the small investor. These days, when a company wants to go public, the
stock underwriter looks for deep pockets to underwrite the stock issue
and that means they initially turn to the mutual fund industry. It's
not very likely that a NIAC style investor is going to find an equity
that has high and consistent growth, have at least 5, if not 10 years of
increasing sales earnings and and still be an undiscovered stock by the
mutual fund industry.

In the old days, before data was so widely and easily disseminated, I
guess it would be possible to find a diamond in the rough before the
mutual fund companies stumbled across it. But now, data is far to
readily accessible, far too easy to screen through computer searches, to
believe that any investor using corporate financial data has any greater
edge over any other investor, unless there is insider activity involved.

I'm in agreement with Lynn...I don't worry about institutional
investing, but I do recognise that sometimes the chihuahua gets stepped
on by the lumbering Sint Bernard, and sometimes the Saint Bernard leaves
scraps on which the chihuahua may feast. In other words, do your own
study and take advantage of falling prices when your favorite stocks
tank due to a fund's decision to liquidate its holdings.

John Munn
Cross Country Investment Club



Garbagecop wrote:

>Hey Nick,
>
>NAIC is a great organization, but they are definitely known for their
>inconsistency! <G> .....cut....
>For me and my club, we don't worry about ownership. Unless we want to start
>buying speculative issues, we'll always have to deal with institutions who
>find the good stocks before we do. Therefore, we use the volatility
>created by the "lemmings" on Wall Street to afford us the chance to buy on
>the dips.
>
>