Page 1086 - How to Make Money in Stocks Trilogy

72 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

■ ✔ Accumulation/Distribution Rating of A or B

Here’s another way to see if institutional investors are buying or selling
®
your stock: Check the Accumulation/Distribution Rating (ACC/DIS RTG ).
Accumulation is a fancy word for buying. Distribution refers to selling.
The Acc/Dis Rating, which ranges from A (best) to E (worst), tracks institu-
tional trading in a stock over the last 13 weeks (roughly three months). It
does that by focusing exclusively on the large-volume trades only profes-
sional investors make.
The table below shows what the A to E ratings mean. In general, only buy
stocks with an A or B Accumulation/Distribution Rating, and avoid those
rated D or E.

Accumulation/Distribution Rating
Measures the level of buying and selling by institutional investors in a stock over the
last 13 weeks
A = Heavy buying
B = Moderate buying
C = Equal amount of buying and selling
D = Moderate selling
E = Heavy selling

The info below for Netflix shows the kinds of gains that are possible when
a stock passes the institutional sponsorship criteria and other areas of the
Buying Checklist.

Netflix’s Institutional Sponsorship Just Before Rising 683%
March 2009–July 2011
Accumulation/Distribution Rating at time of breakout: A–
Fund ownership in 4 quarters prior to big move: 300 ➔ 375 ➔ 395 ➔ 436