IMS Ownership Benchmarking Study Finds Largest Climb in Institutional Ownership Occurs Between $50 and $300 Million Market Cap

IMS recently conducted a benchmarking study which evaluates the percentage of institutional ownership across various market cap levels, ranging from $25 million to $2 billion.

The below graphs detail the results of the study. 

This study demonstrates a basic benchmark of typical percentages of institutional ownership at various public company market cap levels.  The largest jump in percentage ownership occurs between $50 million and $300 million, where the average percentage of managed funds owning a stock climbs from 26.6% to 57.9%.  From there, the percentage of managed funds levels off.  The study also shows a large climb in the percentage of index ownership in this same market range as companies are added to indexes such as the Russell 2000 and funds looking to mirror or stay close to the index performance add these stocks to their holdings.

During this phase of a company’s growth – from $50 to $300 million market cap – a critical foundation is built in a company’s shareholder base.  During this period, as professional managed funds approach and move beyond 50% of the ownership base, it is essential that a company properly communicate developments in their business to align shareholders with management and establish sound corporate governance.  If handled properly, a company’s cost of capital can be significantly reduced during this period.

Each market cap sample group in the study was comprised of 15 companies in the Basic Materials, Consumer Goods, Industrial Goods, Services, and Technology sectors. The study is based on data provided by ThomsonOne.

John Nesbett, President, IMS