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.
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