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Institutional investor

An institutional investor is a large investor such as an insurance company, a pension fund, a mutual fund, or a major investment firm. Institutional investors often trade large blocks of stocks or even whole sectors. They are professionally managed.

Expanded Definition

Institutional investors often find it impractical to invest in small cap stocks. Small caps can be too small to trade in the quantities needed to be of significance to an institutional account. That is one reason they might invest in a sector rather than in a individual stock. Large caps, real estate, and commodities fit better with their goals.

Many stocks are now largely owned by institutional investors. Over 80% is typical. A small publically traded float is permitted to arrive at a fair market price for the stock in question.

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