Every quarter, Nasdaq provides the institutional ownership information for many popular stocks. Out of curiosity, I visited the page to check the institutional ownership situation regarding Nokia (NOK). In the recent year, the company's shares and debt were downgraded multiple times by multiple rating agencies and analysts were competing with each other to be the first one to downgrade the company. This is why it was important to see what institutions were doing with Nokia. After all, it is not uncommon for some institutions to say one thing and do another. If a large institution said to "sell" a stock but it kept buying the same stock, this would raise my suspicion.
In the face of extremely negative sentiment, two investment banks, namely Morgan Stanley (MS) and Goldman Sachs (GS) increased the number of Nokia shares they were holding greatly in the last quarter. In the beginning of last quarter, Goldman Sachs held 61 million shares of Nokia. As of the end of the last quarter, the investment bank holds 116 million shares of the company. This indicates an increase of nearly 90%. As for Morgan Stanley, the bank held 4 million shares of the company in the beginning of the quarter, whereas, it ended up holding 32 million shares by the end of the quarter. This is an increase of nearly 700%.
Some other institutions also increased their stakes in the company. Barclays increased the number of its Nokia shares by 115% whereas Credit Suisse increased its Nokia shares by 94%. The global investment group of Barclays also initiated a long position in the company with nearly 1 million shares. Bank of America (BAC) and UBS decreased their Nokia holdings in the quarter, but this could be part of asset sales by these two banks.
In the quarter, 112 institutions increased their Nokia shares by 128 million shares, whereas 163 institutions decreased their Nokia shares by 77 million shares. In net, the institutional ownership of Nokia increased to 17%.
The next update of Nokia's institutional ownership will be released by Nasdaq around the first week of January. I expect many institutions to increase their shares in the company in this quarter. Given how Nokia's shares bounced back from $2.50 to $3 within a matter of days, I wouldn't be surprised to see many institutions having bought this stock recently.
Until recently, the company's survivability was a huge question. This is probably why the company has been trading near its book value recently. Normally, it is very rare for technology companies to trade near their book value unless the investors seriously fear that the company is on the brink of bankruptcy. Lately, the strong demand for the company's flagship phone Lumia 920 seems to have removed much of these fears.
When big institutional banks tell people to buy stocks, it may not be a big deal, but when they actually go ahead and buy the stocks, it is a big deal. There is a lot of potential in Nokia and it can easily double in a year if the company can convince the investors that it is here to stay.