Calculation of Inst%Own

Hi everybody,

I saw that the factor INST%OWN for some companies is greater than 100%. E.g. Iconix (ticker: ICON) currently shows an Inst%own value of 121.5%. The P123-description for this factor is “It is calculated by dividing the number of shares owned by instutions by the number of outstanding shares and multiplying by 100.”

Am I right in assuming that the value > 100% is - at least in this particular case - caused by the convertible notes issued by Iconix? (So that the fully diluted number of shares would be applied)

Thanks!

Ralph


This may be due to double counting of shorted stocks. The institution lending out the stocks has the stock, and so does the institution buying from the short seller.

Maybe the institutions have also been issued warrants which would inflate their number. Good question.

David and Sandro, thanks, these are valuable thoughts! Yes, I also thought of warrants or other convertible rights. If Sandro’s assumption is right, that might be an issue the P123 admins might want to look into. The short interest in % of float is currently 35.6%

I saw that on Google Finance a similar (wrong?) inst%own is shown, 109%, see here: https://www.google.com/finance?q=icon&ei=Q_FVVpG2CMqosgGEwLbwDA

Perhaps Marco and the team can investigate and clarify this further?

This article made sense to me (as others said above, double counting):
http://www.investopedia.com/ask/answers/07/institutional_holdings.asp

I also found this on the web (I found the comment about short interest ratios can also exceed 100% to be interesting):
“Because shares that are shorted are owned by more than one party (the original lender plus the purchaser on the other side of the short sale), institutional ownership can exceed 100%. If a share sold short is re-borrowed and sold again, short interest ratios can also exceed 100%.”
Asquith, Pathak & Ritter. “Short Interest, Institutional Ownership, and Stock Returns.” Journal of Financial Economics.

Another related interesting term is short float.
Short float: The short percent of float is the percentage of shares short in relation to the number of shares that make up a stock’s float.
The short float for PALM is ~43% right now, which means 43 out of every 100 shares in the market are shorted. That’s a very high ratio for any company. This can be the case when there are strong rumors of a company burning to the ground. My bet is against the grain. We’ll see if this a monetary painful or fruitful learning experience

Dear David, thanks so much for investigatng this in detail, that seems to fully clarify the calculation. I still find this double counting misleading, and wonder why the double count is not generally corrected, not only in P123 but already in the source data. But knowing the “error” enables us to handle it! Have a great weekend and best regards! Ralph