FAIRFAX, Va. - Small-cap stocks, once neglected by most institutional investors save for a few specialty managers, now have almost as much institutional ownership as the largest stocks, the newly released Brancato Report on Institutional Investment shows.
The study, examining the 1,000 largest U.S. companies in terms of market capitalization, shows institutions held an average of 52.4% of the stock of companies ranking from 751 to 1,000 in size in 1994. By contrast, institutions owned 50.4% of these small stocks in 1993, and only 37.7% in 1990.
In 1994, institutions owned 52.7% of the stock of the largest companies - those ranking in market value size from 1 to 50. In recent years, institutional ownership of the largest stocks has varied, from 47.2% in 1993 to 52.1% in 1992.
The study shows stocks of companies with the greatest concentration of institutional ownership ranked between 51 and 750 in size. These concentrations in the middle four market-value size groups ranged from 58.2% to 64.3% in 1994.
The report is based on key series of data on U.S. institutional investors developed by Carolyn Kay Brancato and published annually by Victoria Group of Fairfax, Va. It analyzes the trends in holdings of pension funds, money managers, mutual funds, insurance companies and bank trust departments in both the U.S. and foreign equity markets.
Among its findings, the 72-page study said:
Institutional ownership of the largest 1,000 U.S. stocks has grown, averaging 57.1% in 1994, up from 55.8% in 1993 and 46.6% in 1987.
Total U.S. equity holdings of foreign corporations increased 19.5% to $288.5 billion by year-end 1994 from $241.4 billion in 1993.
U.S. equity holdings of Japanese companies continued to increase, growing to $49.8 billion by year-end 1994 from $35.1 billion in 1993 and only $9 billion in 1988.
Net purchases of foreign stocks by U.S. investors totaled $47.1 billion in 1994, down from $62.7 billion in 1993, but still higher than other years.
Institutional ownership concentration increased through the capitalization brackets from 52.7% for the 50 largest companies, to 58.5% for the top 100 companies and to a high of 59.5% for the top 250 companies.
Larger companies increased their share of the market in terms of market capitalization, after several years of declining in size. The 1,000 largest companies accounted for 78.2%, or $4.3 trillion, of the total market capitalization of all domestic companies in 1994. That's up from only 72.5%, or $4.1 trillion, in 1993. But the most recent figure is down substantially from 1990, when the market value of the top 1,000 companies accounted for 89.1%, or $2.9 trillion, of the total market capitalization of all companies of $3.3 trillion.