Note New Stock Positions Bought in the Last Quarter

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Note New Stock Positions Bought in the Last Quarter

Many investors feel disclosures of a fund's new commitments are published after the fact, too late to be of any real value. This is riot true. These reports are available publicly about six weeks after the end of a fund's quarter. The records are very helpful to those who can single out the wiser selections and understand correct timing and the proper use of charts.

Additionally, half of all institutional buying that shows up on the New York Stock Exchange ticker tape may be in humdrum stocks and much of the buying may be wrong. However, out of the other half you may have some truly phenomenal selections.

Your task, then, is to weed through and separate the intelligent, highly informed institutional buying from the poor, faulty buying. Though difficult, this will become easier as you learn to apply and follow the rules, guidelines, and principles presented in this book. Institutional trades usually show up oil the stock exchange ticker tape
in most brokers' offices in transactions of 1000 shares up to 100,000 shares or more.

Institutional buying and selling accounts for more than 70% of the activity in most leading companies. I estimate that close to 80% or 90% of the important price movements of stocks on the New York Stock Exchange are caused by institutional orders.

As background information, it may be valuable to find out the investment philosophy and techniques used by certain funds. For example, Pioneer Fund in Boston has always emphasized buying supposedly undervalued stocks selling at low P/E ratios, and its portfolio contains a larger number of OTC stocks. A chartist probably would not buy many of Pioneer's stocks. On the other hand, Keystone S-4 usually remains fully invested in the most aggressive growth stocks it can find. Evergreen Fund, run by Steve Lieber, does a fine job of uncovering fundamentally sound, small companies.

Jim Stower's Twentieth Century Ultra and his Growth Investors funds use computer screening to buy volatile, aggressive stocks that show the greatest percentage increase in recent sales and earnings.

Magellan and Contra Fund in Boston scours the country to get in early on every new concept or story in a stock. Some other managements worth tracking might be AIM Management, Nicolas Applegate, Thomson, Brandywine, Berger, and CGM. Some funds buy on new highs, others try to buy around lows and may sell on new highs.

In a capsule, buy stocks that have at least a few institutional sponsors with better-than-average recent performance records.