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Fund Ownership

The percentage of common shares owned by mutual funds. It is derived by dividing the aggregate number of company shares owned by mutual funds by the total shares outstanding and multiplying by 100.

A high % Fund Ownership figure can be an indication of the market's overall belief in the value of a stock. Conversely, a low % Fund Ownership figure can indicate that the stock has not proven to be worthy of its valuation. This information is calculated using the latest portfolio for each mutual fund included in Morningstar's mutual-fund database. The company's total shares outstanding are found in the company's most recent 10-K report.

Example: Company A has a Fund Ownership % of 84.5%, even though it is currently held by only two mutual funds-Fund B and Fund C. The company has a very small market cap ($8.8 million) and only 1.2 million shares outstanding, so even though the stock only makes up 0.1% of Fund B, the fund owns more than 83% of Company A's outstanding shares.

The purchase of a particular company's stock by a number of mutual funds can indicate the market's overall sentiment toward the stock. If many funds own a stock and are still buying it, the overall sentiment is probably bullish. Because mutual funds can purchase large amounts of a company's stock, this leaves a smaller pool of common stock available to other investors. The actions of large fund owners can also affect the price of the company's shares; if a major fund owner decides to sell, for example, it puts downward pressure on the firm's share price. Thanks to their large ownership stakes, large fund owners might also have the ability to influence and monitor company management.

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