The Small Stock Trader by Mika

Author:Mika
Language: eng
Format: azw3
Published: 2014-02-01T05:00:00+00:00

The smaller the company, the smaller the number of big shareholders it will have, which makes it much easier for small stock traders to track them. A typical small cap may have about ten big shareholders who have more power than the hundreds of big shareholders of large caps. Furthermore, if you focus on a few small caps within the same industry, you may notice that a significant part of the total shares outstanding in each of them are in the hands of the same ten or so long-term oriented big shareholders who may act as your bodyguards against some short-term oriented hedge funds or private equity funds that seek for quick returns. But then again, not all the big shareholders are equal. You should pay more attention to those big shareholders that have really a focused portfolio, play an active shareholder’s role, are well informed, attend the annual general meetings of the company, raise important questions and even challenge the managements of your focus stocks. And if you see that such focused and well-informed big shareholders are selling their positions in your focus stocks, this may be a red flag. Try to find out their reasoning. Likewise, their buying may be a green light.

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