floating stock is the number of a company's shares that are available for the public to buy and sell. total floating stock is usually less than total outstanding stock because company insiders, employees and major shareholders such as institutions and holding companies tend to own a significant percentage of outstanding shares. the shares that these entities own are called closely held stock. outstanding stock minus closely held stock equals floating stock. ? wants to purchase some stock. but, she wants to make sure it will be highly liquid so she can buy and sell it easily. one factor she needs to look at them is how much of the company's stock is floating stock. ?, the higher the percentage of floating stock compared to outstanding stock, the more liquid that stock will be. a stock with a large float will also be less volatile and have a smaller bid-ask spread, two other characteristics that ? finds attractive in a potential investments. ? considers xyz corp as a possible investment. it has 50,000,000 shares outstanding. management and insiders own 5,000,000 shares and institutions own another 5,000,000. the remaining 40,000,000 shares or 80% of outstanding stock are floating stock. since xyz corp has a high float and meets ?'s other investment criteria, she decides to buy 100 shares. ? knows that floating stock is subject to change. the company might have a secondary offering of stock to raise money to expand the business or company insiders or institutions might sell some of their closely held shares. these actions would increase floating stock. on the other hand, xyz corp might buy back several million of its outstanding shares or do a reverse split, either of which would decrease floating stock.
- holding company・・・持株会社
- reverse split・・・株式併合→https://ja.wikipedia.org/wiki/%E6%A0%AA%E5%BC%8F%E4%BD%B5%E5%90%88