Should I care about how many shares of a public company are in the hands of institutional investors?

Oldman answered one year ago …

If the security has a large "float', or number of shares traded/session is large, then the institutional investor class may have little effect on pricing ... but beware of small caps, whose float may be small, and who have only one or two large bocks of their common stock under the control of a "deep-pocket: investment institution...because these may be capital inflows designed to prop up the balance sheet.

One example is Raser (RZ) a geothermal power startup whose main backers are Merrill-Lynch, who is using the tax write-off in exchange for underwriting RZ' start-up expenses. Now, I do hold a small position in RZ; I don't necessarily recommend it...but it's an example of how to look at the purpose of the institutional holding...RZ gets the funds, MRL can take expenses and tax breaks ... until RZ starts production and profits. Then MER will generally slowly sell their tax-shelter.

On the other hand, a large cap like GE is in so many portfolios, and Index funds, that a list of its institutional holders probably looks like a "Who's Who" of investment banks and Mutual Fund companies.