RE: Weekly Pick

["Jim Greening" <JimGinVA@xxxxxxx>]

John,
     The conventional wisdom is that you want undiscovered stocks with low 
institutional ownership so you can benefit from the high volume and run up 
when the institutions do find your jewel.  That definitely works if the 
institutions find the stock.  On the other hand, you may have to wait for 
months or forever for the institutions to find your jewel.  The other problem 
is the risk associated with high institutional ownership.  If they own most of 
the stock and a problem develops, the sudden drop is a killer when everyone 
tries to get out the door at once.  That definitely is a risk to consider and 
a valid reason for not buying a high institutional owned story stock without 
solid earnings.
     On the other hand, lets look at institutional favorites with solid 
fundamentals that have just had a 30 top 50% correction.  It's the old 
difference between the conventional buy low and sell high theory and the 
CANSLIM buy high and sell higher theory.  First, I don't have to wait for the 
institutions to discover the stocks.  They already own them, so the 
institutional interest is already there.  Granted the risk is high if the 
fundamentals falter, but the risk has to be less than it was before the 
correction.  If the institutions have held on through a significant 
correction, they will continue to hold unless the fundamentals change.  Second 
I've mitigated the risk with a close stop under the up trend channel.  That 
won't protect me from large gaps down, but that's a risk I'm willing to take 
for the potential rewards.  The big advantage is that the already high 
institutional ownership has drastically reduced the float.  If the stock 
starts back up and the institutions decide they want more, the small float can 
result in large gains.  If we have high insider ownership at the same time, 
that not only further reduces the float, but gives management an incentive to 
make sure the stock does well.  In summary, high risk yes, but high reward as 
well.
     Does that make sense to you?  No guarantee that I'm right, that's just my 
contrarian thinking <G>.
Jim       
     

-----Original Message-----
From:	John & Paula 
Sent:	Sunday, April 27, 1997 9:52 PM
To:	metastock-list@xxxxxxxxx
Subject:	Re: Weekly Pick

Jim,

Thanks for the market analysis.  I always find what you have to say
interesting and useful. 
I wonder, though, why the 85% institutional ownership of COMS doesn't
concern you.  It seems to me that with such a high figure, the stock has
much more room to decline than to ascend.