Stocks Favored By Institutional Investors

by David Jenyns on September 2, 2009

Institutional investors — insurance companies, investment trusts, endowment and pension funds — invest in different stocks than individual investors. The utilities companies, the food processors like General Foods, General Mills, National Biscuit, and National Dairy Products, and retail trade — Allied Stores, Sears, Marshall Field — are all involved in basic products for which there is a demand regardless of the economic weather, and stocks of this sort are frequently found on recommended lists “for income.”

Sales resistance in any year can cut drastically into profits and make an automobile stock an uncertain investment for income.

Despite the premier ratings given to some of its stock, steel has been traditionally regarded as a “prince or pauper” industry.

Lists, guides, and gauges such as these are grist for the institutional investor’s mill, but they provide no certain answers in the search for the appropriate income-producing stock. The conditions under which others buy, and the reasons for which they buy, are not necessarily relevant to your situation or your neighbor’s.

Stability, therefore, would seem to require a basic product, or service, manufactured or distributed by an established company in established markets. The ideal is an all-weather product, not subject to seasonal slumps, to changing fashions, or to family budget limitations when money is tight.

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