| Not all shares of stock are equal. There are | | | | They hold 20 shares as treasury shares. There |
| several different types of shares out there. When | | | | are 10 restricted shares of the company. The |
| looking to invest, it is necessary that you have | | | | float is 70 (100-20-10= 70). The outstanding share |
| the complete picture in view. Before you can | | | | amount is 80 (10+70=80). |
| make an informed investment decision, you need | | | | When you look at the relationship of treasury |
| to know the terms that define shares. | | | | shares and restricted shares to the float shares, |
| Authorized shares represent the total number of | | | | you see where the controlling interest of the |
| shares of stock that were authorized when the | | | | company resides. There are many companies that |
| company was created. The number of shares can | | | | retain a large percentage of the authorized shares |
| only be increased through a vote by the | | | | in treasury shares and in restricted shares. |
| shareholders. Although the shares were | | | | By doing this, they are making sure that they |
| authorized, that does not mean that they were all | | | | can't be taken over by another company. They |
| issued to the public. | | | | can also issue this stock in the future as a way to |
| Some companies will retain shares to use later. | | | | raise funds. |
| These are called treasury shares. You may see a | | | | If the float of a company is quite small and yet |
| company release treasury shares onto the | | | | the stock attracts many investors, it can often |
| market in order to bring in money for a project, | | | | become volatile due to the imbalance between |
| expansion or research. | | | | the supply and the demand. The stock will go up, |
| Restricted shares are company stock used for | | | | become overpriced and then fall quickly in many |
| employee incentives and compensation plans. | | | | cases. |
| Restricted stockowners will need the permission | | | | By watching restricted shareholders, you can get |
| of the SEC to sell their shares. After a company | | | | a lot of information about a company. You can |
| first goes public, there is a waiting period in which | | | | visit insider trading sites that let you know the |
| the insiders' restricted stock is frozen. No matter | | | | planned or recent sales by insiders and major |
| how established the company is, all insiders must | | | | stockholders. You can often get a feel for the |
| file with the SEC before they sell their restricted | | | | company through watching what they are doing. |
| stock. | | | | By understanding the various types of shares, |
| Float shares are the number of shares that are | | | | you will have a better insight to the company |
| actually available for trade on the open market. | | | | itself. All stocks aren't created equal. Make sure |
| Anyone can purchase these shares. The | | | | you know where the control lies in a company. It |
| outstanding shares are all of the shares issued by | | | | can tell you a lot about where a company is going. |
| the company, including the restricted shares and | | | | By understanding shares, you find that you are |
| the float shares. | | | | prepared to analyze companies. |
| For example, if company authorizes 100 shares. | | | | |