Even as the general market was topping and preparing for its most recent swoon, a number of stocks became targets of increased institutional buying. Many analysts view institutional purchases as a harbinger of better things to come for a stock, particularly if the institutions are just arriving to the stock buying party. As in many walks of life, institutions regularly travel in packs, scooping up shares of companies that their rivals just bought into but, were previously unaware of.
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All in all, institutional buying is one of the most effective means of putting an unknown company on the public's radar and sending it skyward as publicity for the firm increases. Here are four companies that saw increases in pension, mutual, hedge and/or sovereign wealth fund buying over the last month.
Something Brewing Off the Gulf Coast?
McMoran Exploration (NYSE:MMR) is an oil and gas exploration and production company with assets that are focused on the Gulf of Mexico. The stock price nearly doubled last month, rising from roughly $9 to nearly $17 in a mere seven trading sessions. The greatest part of the jump occurred on a single day, when trading volumes leaped to 40 million shares. The stock regularly sees between two and four million shares change hands in a day.
Happy about that surge of institutional interest, no doubt, was investment guru, T. Boone Pickens, who just last September bought one million shares of McMoran Exploration and has since seen them rise by better than 110%. For those interested, Pickens also took out larger positions at the same time in Hess Corp. (NYSE:HES) and SandRidge Energy Inc. (NYSE:SD), both oil and gas players.
For the 2009 calendar year, MMR stock was not nearly as exciting as it has been of late, ending down nearly 17%.
Big Jumps in Share Volume
Conexant Systems Inc (Nasdaq:CNXT) saw similar rises in both price and share volume when the institutions came on board last week. The stock gained about 50% in three sessions. Conexant sells semiconductor systems and equipment.
Shares of Tuesday Morning Corp. (Nasdaq:TUES), a retailer of home furnishing closeouts, gapped higher in mid-January, putting on a better than 50% gain since then. The institutional fingerprint was plain to see in share volumes that leaped eight-fold on the gap-up trading session.
The Bottom Line
These stocks prove that institutional interest can do wonders for a stock - not just on the day of the funds' purchase, but in the days and weeks that follow. There's perhaps no publicity better than a company's first institutional purchase. (Learn about the pitfalls of copying big name investors in Why Being A Copycat Investor Can Get Your Hurt.)
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