Money 101

[DownWithPumpers]

Institutional investors can be one of the most welcome things a company can ask for. It is rare to have institutional investors in penny stocks for one, much less pinkies, but rather more commonly seen in bigger board stocks, where these types of buyers feel more secure in their investments. The benefit they add as shareholders is that they tie up shares from the float (if bought from the open market) for long periods of time. Usually, until they've realized a very handsome ROI.

I agree. Institutions are rarely interested in penny stocks.

Talk of anonymous institutional investors is a red flag, as is any other claim that is unsupportable through your own due diligence.

Here's a couple references to respond to such people:
1. Use this link from the MSN Money article below to check institutional ownership. If it's not listed, or it's below 15%, you can use the below article to accuse them of a Pump and Dump. (That's sure to make you very popular, LOL.)
Check Institutional Ownership Here at MoneyCentral.Com

2. Use this reference article:
Beware of 'pump-and-dump' stocks

Here's a quote:
Rule #4: Institutional ownership at least 15%
Institutions are mutual funds, hedge funds, pension plans and other large investors. Because they are such big players, there is no publicly traded stock that escapes their attention. When a new stock is brought to market, the investment bankers handling the IPO (initial public offering) make presentations touting the stock to all of the institutional buyers they can round up. No matter how small and obscure the company, it should fit some mutual fund or other institutional buyer's game plan. Thus, if institutions don't own a stock, it's because none of them think they can make money doing so.

Institutional ownership is the percentage of a firm's outstanding shares held by the big players, and typically runs in the 30%-to-95% range. Anything below 25% or so is probably a bad idea. However, setting the minimum at 15% is good enough for our needs. Avoid stocks with institutional ownership below 15% (shown in this site's Company Report).