Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Wednesday, March 01, 2006

Is BOT the next CME?

I wrote a new case study earlier today on CBOT Holdings (BOT) and realized the huge upside potential based on the lack of support by institutional sponsors in its early days on Wall Street.

The stock debuted in October and has since developed a cup shaped base without a handle (at this time) and has resistance at $120. A breakout above $120-$122 is a buy signal and the “high” price at this level should not discourage investors.

What is high to some investors may be low to others. If you question this theory, take a quick look at the multi-year chart for Chicago Merchantile Exchange (CME). That stock has moved from $60 to more than $400 in the past two years.

Here is a simple snapshot of the Institutional Sponsorship for BOT:

Number of Institutions (most recent reporting period):
% Shares held by Institutions: 3%
Total Institutions: 69
Money Market: 49
Mutual Funds: 19
Other: 1
Top Institutional Holder: Mazama Capital Management, Inc. (606,932 shares) 0.01% of portfolio


What interests me the most is the fact that only 3% of the shares on the market are held by major institutions such as money managers and mutual funds. When compared to CME, we can see that 280 money market mangers, 486 mutual funds and 24 other institutional investors currently hold positions in this stock. If BOT was to follow in the footsteps of CME, based on these stats alone, I am eager to establish a position right now! CME also has a 72% institutional sponsorship rating.

Piranha

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