Institutional investors have decreased the number of buy transactions of iStar Inc. (NYSE:STAR) over the past quarter according to the latest SEC Filings. Transactions were down -8.15% as firms now own 93.30% of the company stock.
Organizations that control a large sum of money, like insurance companies, pension funds or mutual funds and buy stocks are called “institutional investors”. As opposed to “retail”, or individual, investors, institutional investors trade in very large blocks of shares (10,000 or more) at once. As one can imagine, the large transactions that institutional investors make can significantly alter the price of a commodity.
PROS AND CONS
It can be argued that institutional ownership is either a good thing or a bad thing. William O’Neil, founder of the research firm, Investor’s Business Daily, argues that institutional investors make up the single largest of stocks demand, providing the push needed to drive the price of a stock upward. O’Neil argues that when a stock has no institutional owners, it is because they have researched and ultimately passed on it. He earmarks institutional ownership as one of the six characteristics to look for in a stock that investors would want to buy in his book “How to Make Money in Stocks”.
Peter Lynch, however, describes in his best-selling book, “One Up on Wall Street” the thirteen characteristics of what he describes as “the perfect stock.” Regarding institutional ownership, he is quoted as saying “Institutions don’t own it and the analysts don’t follow it”. He prefers stocks that the big investment groups pass on because these stocks are more likely to be undervalued.
Both investing giants agree that institutional ownership can be dangerous because these companies maneuver in and out of financial markets in large blocks, meaning if something bad happens, the stock’s value will plummet if sold.
The stock stands -0.45% away from its 50-day simple moving average and also 6.55% away from the 200-day average. Recently, the commodity stands -20.24% away from the 52-week high and 40.18% from the 52-week low. The RSI (Relative Strength Index), an indicator that shows price strength by comparing upward and downward close-to-close movements is 47.15.
The consensus analysts recommendation at this point stands at 3.00 on this stock. This is based on a 1-5 scale where 1 indicates a Strong Buy and 5 a Strong Sell. Further, analysts have a 12 month target price of $13.00 on company shares. This is according to the analysts polled by Thomson Reuters which have recently published research reports on the firm.
Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
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