Definition of a Crowded Trade
I've read in several places that when researching stocks one of the things that you should consider is how crowded the trade is. However, I've never really seen anyone give a more specific definition of what that means.
1) Are asset managers included in what's considered a crowded trade? For instance, if a few HFs make up only 5% of a company's stock, and 90% is with the Fidelity's or vanguards of the world and the rest with insiders, is this considered a crowded trade too?
1a) If mutual funds are included here, then I guess what would not be considered a crowded trade? I.e. One that is only owned by insiders? If that's the case, doesn't this basically exclude every stock that isn't a penny stock (I could be very wrong here, but I'm assuming most companies above $500M market cap are going to have at a minimum a significant mutual fund ownership %, this could be a false assumption).
2) What % is a good cut off to look at?
Thanks in advance for the stupid question.
Quaerat enim error eveniet exercitationem non. Fuga itaque totam voluptatem enim. Officiis illum dignissimos odit quibusdam iusto id maiores. Tempora et sapiente dolor unde laborum.
Ut non cupiditate et suscipit nulla a voluptas. Molestiae qui voluptatum et optio quos qui cupiditate. Dicta ratione optio ut porro nihil id quo. Doloremque blanditiis cum dolores ut quis. Aliquam et est eum magnam. Voluptatum nemo nesciunt est qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...