Stocks Heavily Owned by Institutions Up Big

We recently broke the S&P 500 into deciles (10 groups of 50 stocks) based on a stock's institutional ownership and calculated the average performance of stocks in each decile since the 11/20 low. As shown below, the deciles of stocks that are most heavily owned by institutions have done the best during the rally, while the least owned stocks by institutions are up the least. Is this an indication that the deleveraging from institutions has finally started to ease?

click to enlarge

Comments

[Wolfhounds:]

Opportunity always knocks in unloved and under followed stocks. It just takes a more work. At the bottom I bought BEAV, SNHY, ISRG, MVL, and a speculative biotech EXEL. I sold BEAV for a quick 25% profit, but the others have have no debt, lots of cash, and good business models.

2008 Dec 15 09:11 AM

[USER206545:]

I actually tend to think that due to low buying pressure the buying of the institutionals caused those stocks to move up, and not their honed stock picking abilities...
Sure there are some undervalued companies out there, but till some heavy buying will take place they will stay undervalued, hence i think what i've written in the former paragraph. anyone agrees?

2008 Dec 15 09:26 AM

[ddearborn:]

There is another possibility of course. Massive manipulation and outright fraud perpetrated by the top wall street firms. Hmm...even marginally "random" markets would cause these guys at the very top to stumble a good percentage of the time. And yet over and over again these same guys manage to "read" the market and come out on top. The only difference of late is that these guys have started to fight amongst themselves. And as a result there have been some spectacular casualties. Naturally the tax payer picks up the tab.

If you believe anything the "leaders" of wall street and our government are saying about just about anything; I have a bridge for sale........

2008 Dec 15 12:43 PM

[USER206545:]

to ddearborn: sadly where i live (israel) those institutionald lost the tax payer more then 25% of his retirement money. seems they bought corp' bonds of way overleveraged real estate companies. those companies are now buying their loans back at around 20-30 cents on the dollar. honestly, i dont know which one of us is better off .. :|

2008 Dec 17 01:34 AM