By Relmor Demitrius -
As reported in recent weeks, institutional ownership in shares of Sirius XM Radio (NASDAQ:SIRI) have been increasing. This is especially significant due to the distressed price levels the equity was experiencing and institutional interest in a stock that is bottoming is crucial in gauging street sentiment going forward. Basically the thinking is this, if an institution doesn’t want to buy a stock when its under $1, maybe you shouldn’t either.
As these reports are sometimes not arriving until 2 months or more after the actual purchase of the stock, it would behoove one to be careful and diligent when interpreting this information. Many factors should also be considered when looking at an institutional ownership report. What was the price action during that period versus current prices? Was the stock in an uptrend or downtrend? What does the fund do? Is this fund the end holder? Do they tend to trade or invest in the company? What is this funds trading pattern with the equity? As you can see this is no exact science.
Reports from Q4 institutional holdings are now arriving. I try to focus only on the top holders, and in this equity I am looking at institutions who hold more than 10 million shares.
Vanguard Group, Inc. has added 6.3 million shares in the fourth quarter of 2009. They already held 153 million shares before this addition in Q4, and were their largest shareholder, not counting of course the 40% preferred stake Liberty Media, through Liberty Capital (Nasdaq:LCAPA) owns in the company.
Vanguard first added large amounts of shares in Sirius XM Radio on the Q3 report in 2008, well after the merger financing was known about, and before so many recent improvements in the balance sheet have been made. Vanguard was a believer apparently in the business model of the combined companies from day 1.
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