@MostoyswinsIt’s not just SOI that’s relevant. Market cap is a...

@Mostoyswins

It’s not just SOI that’s relevant. Market cap is a very important consideration too. As is the number of shares held by key personnel ie directors and management, which is far more important than the holdings of top 20 shareholders IMO which many on HC seem to ascribe value to but the reality is that non-company aligned top 20 shareholders are less sticky than related parties such as directors and management.

The reason I prefer companies with a lower number of SOI is it generally means management has been more efficient with shareholders capital. If you have a lot of SOI it means you’ve raised a lot of capital at low share prices. This is generally a good indicator the company’s management has wasted shareholders money. By extension, if a company with a high number of SOI releases good news there are often a lot of old shareholders (who have lost money historically) who use the opportunity of a rising share price to run for the exit. This in turn impedes any positive share price momentum.

Also, there is a basic supply/demand dynamic at play here. If there are less shares to buy (due to low SOI and significant ownership by directors and management), buyers need to pay up to get in. This can result in more extreme share price movements, both up and down.

All IMO. Others may have different views...