Identifying Stock Crowding and Creating Strategies to Mitigate the Distortion

Excess liquidity. The herd instinct. Investment vehicles marching in lockstep. These are some of the classic factors that lead to ‘stock crowding,’ the phenomenon whereby most of the willing buyers for an asset already own it. If events turn those owners into sellers, they find themselves scrambling to find anyone to sell to. The result is chaotic, painful and potentially contagious. Clearly, there is value in gauging exposure to stocks that are crowded. But how to do so, especially in a market where the free float is shrinking and all of the credible names are arguably crowded? One answer is the quantitative analysis of EPFR’s stock flows and allocations data. In this webinar Sayad Baronyan, EPFR’s principal quantitative analyst for the EMEA region, will discuss the role flows data can play in identifying degrees of stock crowding and fragility and in creating strategies to mitigate or benefit the distortions this phenomenon creates in the marketplace.