Low Float Stocks: 15 Companies With Very Limited Shares Available
The number of shares of a stock available to traders is known as “floating stock.” So, naturally, low float stocks are securities with fewer shares available than usual. But you won’t find low float stocks on the major exchanges.
To be listed on the New York Stock Exchange, companies need to have at least 1.1 million publicly traded shares. The Nasdaq requires at least 1.25 million shares be made available. This is to ensure a certain level of liquidity. It can reduce volatility, the size of spreads and the level of market manipulation by bad actors.
This is why low float stocks are found on over-the-counter (OTC) exchanges. To calculate a company’s floating stock, take the total number of stocks and subtract restricted stocks and closely held shares.
Restricted stocks of a company are unregistered shares that are issued to insiders. These insiders can include corporate executives and directors within the company as well as corporate affiliates. These shares are not able to be transferred. In order for them to be traded, extra steps must be taken to ensure compliance with the Securities and Exchange Commission.
Closely held shares are slightly less common. If a company’s shares are owned mostly by an individual or a small group of controlling stockholders, those shares are considered closely held.
After subtracting restricted stocks and closely held shares from the total number of authorized shares, we’re left with the number of floating shares actually available for trading. The table below represents 15 low float stocks with some of the fewest shares available.
Low Float Stocks With a Minimum Market Cap of $100,000
|Ticker||Name||Equity float (in thousands)|
|GGLT||Giant Group Ltd.||11.16|
|SSCC||Spirits Capital Corp.||4.43|
|FPCG||First Physicians Capital||9.83|
|SWIOU||Southwest Iowa Renewable||8.85|
|BPCP||Bishop Capital Corp.||8.82|
|CRDE||Cardinal Ethanol LLC||8.58|
|SBBG||Seibels Bruce Group||7.82|
|VCON||Vicon Industries Inc.||4.42|
|MAJJ||Michael Anthony Jewelers||4.17|
|ICTPU||American Restaurant Partners||2.01|
|VRTB||Vestin Realty Mortgage||1|
What to Know About Companies With Low Float
For the most part, the companies listed above are very small companies. Some would barely register as nanocap stocks. For reference, a nanocap stock is a company with a total market capitalization of less than $50 million. So an investment in any of the companies on our list of low float stocks would be a pretty big gamble.
Also, any potential investors should prepare for a little sticker shock. Some of these low float stocks have price tags that would make investors in Amazon (Nasdaq: AMZN) blush. But that’s par for the course. It doesn’t take much to move the price of a stock when so few shares are available.
This is one of the reasons institutional investors avoid low float stocks. There can be an extremely wide bid-ask spread. And the lower amount of liquidity means purchases of a large number of these stocks can have a sizable impact on the share price. Which – for the most part – might reward company insiders more than the investors. This is based on the assumption that many of these low float stocks are held mostly by insiders and in employee stock ownership plans.
Nonetheless, these low float stocks can be of interest to a very specific type of investor. They’re more likely someone with a high risk tolerance than someone with a long-term investment strategy who’s thinking in terms of retirement. But hey, to each their own.
The Bottom Line on Low Float Stocks
There can be a lot of risk associated with low float stocks, especially when there are merely a few thousand shares available. It really wouldn’t take a whole lot of interest to send these stocks careening in any given direction… simply because there is such a small supply.
To put this into context, the number of floating shares of General Electric (NYSE: GE) is a little more than 3 billion. And that is why its price swings are a whole lot more modest.
About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dogs Dorito and Pretzel.