If large institutions own a particular stock, especially in large amounts, it can certainly be a component worth looking at.
First off, institutional money mangers often have teams of analysts working for them.
In addition, institutions have access to all of the corporate and market data that most retail investors do not.
Lastly, when institutions finally do establish a position in a stock, they will then want to start promoting the underlying company’s merits to the entire financial world. This is done in an attempt to drive interest in the stock with the obvious goal of boosting its price.
So, as a retail investor, it couldn’t hurt to isolate the stocks with the highest level of institutional ownership.
Below are the three small-cap biotech stocks with stocks with the largest amount in institutional ownership.
Related Link: 4 Biotech Stocks With Big Money Coming In
Infinity Pharmaceuticals (NASDAQ: INFI) is a drug discovery and development company in which institutional investors hold 98 percent of its outstanding shares.
Infinity has had a rough go over the last year since its $24.00 peak. However, the stock has turned around from its $8.00 low and currently trades near $13.00 a share.
Number two is Vanda Pharmaceuticals (NASDAQ: VNDA). Institutions currently have 92 percent of the company’s outstanding shares.
Vanda’s stock has held up better than Infinity this year, but has rallied higher similarly over the last two months. The stock closed near $16.00 on Thursday.
Last on the list would be Lexicon Pharmaceuticals (NYSE: LXRX). Institutions have currently hold 90 percent of outstanding shares.
Lexicon turned its slide around in the beginning of June, but how far can the stock go? Watch for a move above $1.80 for another potential leg higher.
Obviously, investors must conduct their own due diligence before investing in any stock, let alone a small-cap biotech one.
It certainly never hurts to try to follow the money to big profits!
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