Institutional investors have significant influence over the stock market, often driving market trends, which is why their favorite stocks can provide valuable insight for retail investors. In this article, we’ll dive into the top 5 stocks among institutional investors, explaining who these investors are and how you can track their moves.
What are institutional investors?
Institutional investors include large entities like pension funds, hedge funds, mutual funds, and insurance companies. Unlike retail investors, who are individual traders, the institutional ones manage vast sums of money. Their trades can cause significant market shifts because they typically involve large transactions.
Insider trading and institutional investors
When institutional investors buy or sell a stock, it’s not the same as illegal insider trading. Insider trading happens when someone uses confidential information to gain an unfair market advantage. Institutional investors, however, follow market regulations and use publicly available data, extensive research, and analysis to guide their decisions.
The decisions they make send a powerful message to the market. Namely, when institutions move into or out of a stock, it can be a signal to others. This is why tracking institutional activity can offer valuable insights.
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Top 5 stocks institutional investors love
Here are the top 5 stocks that institutional investors are buying:
| Stock | Revenue | Institutional ownership |
| Apple Inc. (NASDAQ: AAPL) | Approximately $385.6 billion | 60% |
| Microsoft Corporation (NASDAQ: MSFT) | Estimated around $210 billion | 71% |
| Amazon.com, Inc. (NASDAQ: AMZN) | Expected to reach $480 billion | 58% |
| Alphabet Inc. (NASDAQ: GOOGL) | Projected to be about $257 billion | 65% |
| Nvidia (NASDAQ: NVDA) | Approximately $60.9 billion | 65% |
1. Apple (NASDAQ: AAPL)
Apple remains a favorite among institutional investors due to its strong fundamentals, consistent revenue growth, and dominance in the technology sector. As a global leader in consumer electronics and software, Apple offers both stability and innovation.
- Revenue for 2024: $385.6 billion;
- Institutional ownership: 60%
Apple’s services segment, including iCloud, Apple Music, and the App Store, continues to expand, adding a recurring revenue stream. Institutional investors view this as a strong factor for long-term growth.
2. Microsoft (NASDAQ: MSFT)
Microsoft has a diversified business model that appeals to large investors. Its cloud computing arm, Azure, has been a game-changer for the company, fueling rapid growth.
- Revenue for 2024: $210 billion;
- Institutional ownership: 71%
Microsoft’s aggressive push into artificial intelligence (AI) and cloud computing makes it a top pick. Institutions appreciate the company’s ability to continually innovate and capture new markets.
3. Amazon (NASDAQ: AMZN)
Amazon dominates the e-commerce space, but it’s also a leader in cloud computing with Amazon Web Services (AWS). AWS generates a significant portion of Amazon’s profits, offering a stable income stream for the company.
- Revenue for 2024: $480 billion;
- Institutional ownership: 58%
Institutional investors also like Amazon’s expansion into healthcare and other sectors, which positions it for further growth.
4. Alphabet (NASDAQ: GOOGL)
As the parent company of Google, Alphabet has a monopoly on online search, which is a massive source of ad revenue. In addition to advertising, Alphabet invests heavily in innovative technologies like AI, autonomous driving, and quantum computing.
- Revenue for 2024: $257 billion;
- Institutional ownership: 65%
With its strong balance sheet and continual expansion into future technologies, Alphabet remains a solid choice for institutional investors.
5. Nvidia (NASDAQ: NVDA)
Nvidia is a leader in the design and manufacture of graphics processing units (GPUs), a critical component in gaming, data centers, and AI applications. Its dominance in AI hardware and software has positioned the company as a key player in the AI revolution. The company also invests heavily in emerging technologies, including autonomous driving and edge computing.
- Revenue for 2024: $60.9 billion;
- Institutional ownership: 65%
With its innovative technology and strong market position in AI and data centers, Nvidia continues to attract institutional investors looking to capitalize on growth in these areas.
How to track institutional investors?
Tracking institutional investors can help you get valuable insights into market trends. Investors often follow the smart money moves of institutional players by analyzing their trades. Here are a few ways you can track them:
- SEC filings: Institutions must report their holdings in public companies quarterly using the SEC’s 13F filings. You can access these reports to see what stocks they are buying or selling;
- Financial news and websites: Various websites like Finbold report on institutional activity, providing easy access to their trades and opinions;
- Real-time signals: Platforms like Finbold Signals provide real-time updates on institutional trades via Email, Telegram, and Discord. By using it, you can stay informed about the latest moves by institutions in a timely manner.
Understanding institutional stock preferences
A 2009 study by Bohl, Brzeszczyński, and Wilfling dives into how institutional investor activity affects stock performance. It shows that institutional investors tend to focus on stocks with lower volatility, providing a stable return in the long run. Furthermore, the study emphasizes that institutional preferences typically lead to more predictable market behavior, a factor that retail investors can leverage when making their own decisions.
“Stocks with higher institutional ownership exhibit lower return volatility, reinforcing their role in market stability.” — Bohl, Brzeszczyński, and Wilfling
The bottom line
Institutional investors have significant influence over the stock market, and their preferences provide valuable insights into stock performance. By tracking which stocks they favor and understanding their strategies, individuals can align themselves with smart money and potentially benefit from stable, long-term growth.
For those who want real-time updates on institutional trades, Finbold Signals offers an easy way to stay on top of market movements.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs
What are institutional investors?
Institutional investors are large organizations like pension funds, hedge funds, mutual funds, and insurance companies that invest large sums of money in the stock market. They differ from individual retail investors and typically have a significant influence on stock prices due to the size of their transactions.
Why follow institutional investors?
Institutional investors have access to extensive research, data, and resources, which often guide their investment decisions. By tracking their movements, retail investors can gain insights into market trends and identify stable, long-term investment opportunities.
How to track institutional buying and selling?
You can track institutional activity through SEC 13F filings or by using platforms like Finbold Signals, which offer real-time updates via Email, Telegram, and Discord.
What are institutional investors interested in?
Institutional investors favor companies with strong fundamentals, diversified revenue streams, and long-term growth potential. Companies like Apple and Microsoft offer stability, consistent revenue growth, and leadership in innovation, making them attractive long-term investments.
Which stocks are institutions buying?
Institutional investors often focus on stocks with strong growth potential, stability, and market influence. That said, the top stocks among institutional investors include tech giants like Apple, Microsoft, Alphabet, and Nvidia, as well as Amazon.
