Institutional Investors Have a Big Cap Handicap

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Many large institutional investors create a serious disadvantage for themselves because they incorrectly believe that due to their size they can only buy large capitalization companies. This automatically eliminates from consideration most of the true growth companies. It also practically guarantees inadequate performance because these  nvestors may restrict their selections mainly to slowly decaying, inefficient, fully matured companies. As an individual investor, you don't have this limitation.

If I were a large institutional investor, I would rather own 200 of the most outstanding, small- to medium-sized growth companies than 50 to 100 old, overgrown, large-capitalization stocks that appear on everyone's "favorite fifty" list.

If you desire clear-cut factual evidence, the 40 year  tudy of the greatest stock market winners indicated more than 95% of the companies had fewer than 25 million shares in their capitalization when they had their greatest period of earnings improvement and stock market performance. The average capitalization of top-performing listed stocks from 1970 through 1982 was 11.8 million shares. The median stock exhibited 4.6 million shares outstanding before advancing rapidly in price.