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What is Shares Outstanding? | Share Outstanding vs. Share Float - YouTube
Channel: Investing with Christy Su
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did you know there are different types of stocks聽
and the ones that we can trade through a brokerage聽聽
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account is just part of the stocks a company聽
owns in this video i'm going to be showing you聽聽
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what share float and share outstanding is and the聽
difference between those two to explain let's take聽聽
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a few steps back when a company is incorporated聽
it will state the authorized share amount in its聽聽
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articles of incorporation so this is a maximum聽
amount of shares a company is legally able to聽聽
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issue it doesn't mean that the company would issue聽
all of the shares though for example in costco's聽聽
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articles of incorporation it states that costco is聽
authorized to issue a maximum of 1 billion shares聽聽
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of these 1 billion authorized shares part of it聽
will be kept in the issuing company's treasury聽聽
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as treasury stock and the other part would have聽
been issued to the public and they are known as聽聽
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a share outstanding which is our first term so聽
authorized shares equals treasury shares plus聽聽
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shares outstanding by the way insider shares are聽
also considered part of the shares outstanding聽聽
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because although it's owned by the issuing聽
company's executives it's not owned by the聽聽
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issuing company itself so share outstanding聽
includes shares owned by insiders by institutions聽聽
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like big banks insurance companies mutual funds聽
and by individual investors like you and me聽聽
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the shares that are owned by insiders or pay to聽
the issuing company's employees as compensation聽聽
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are called restricted shares because they聽
cannot be freely traded on the stock market聽聽
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until they pass a vesting period or special聽
guidelines set out by the sec the other part聽聽
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that isn't owned by insiders are known as the聽
share flow which are shares that can be freely聽聽
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traded in the public so share outstanding聽
equals share float plus restricted shares聽聽
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here's a chart of costco's share outstanding聽
and you can see here that throughout the years聽聽
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the shared number is fluctuating there are聽
a few situations that can cause this and the聽聽
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first one is when the issuing company sells more聽
shares which increases its shares outstanding and聽聽
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decreases its treasury shares the second scenario聽
is when a convertible security is executed then聽聽
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that will decrease the treasury share and聽
increase the share outstanding and lastly聽聽
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the issuing company can buy back its shares which聽
will decrease the amount of share outstanding when聽聽
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an issuing company buys back its shares it can聽
either keep it in treasury stock which allows聽聽
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the shares to be issued out at a later date or the聽
issuing company can choose to retire their shares聽聽
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and when a share is retired it cannot be issued聽
out again and that would also decrease the amount聽聽
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of authorized shares for the issuing company as聽
well keep in mind that at any one time and point聽聽
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the share outstanding cannot exceed its聽
authorized shares now let me show you聽聽
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where to quickly find the numbers of shares in聽
some of these categories and before i do that聽聽
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i made a four-step guide on how to evaluate聽
and find stocks that has a durable competitive聽聽
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advantage for long-term investing purposes and you聽
can find that in the description box below also if聽聽
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you haven't subscribed yet hit the subscribe聽
button and the bell so you'll be notified聽聽
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every time i post a new video about investing聽
let's look on finviz at costco so c-o-s-t聽聽
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and then we'll scroll all the way down and here we聽
see that the share outstanding is 443.13 million聽聽
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with a share flow of 441.99 million聽
so remember the equation for share聽聽
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flow is share outstanding minus restricted聽
shares and part of that restricted share聽聽
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is insider ownership so for costco there's聽
0.1 percent of insider owners and these people聽聽
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have to register with the sec before they can聽
buy or sell their shares another portion of the聽聽
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restricted shares are shares given to employees as聽
compensation but it's not fully vested yet so just聽聽
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note here that we cannot directly calculate sheer聽
float from share outstanding just with insider聽聽
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ownership another interesting number we see here聽
is the institutional ownership which is 70.1聽聽
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so 70 percent about and that means the majority聽
of costco is owned by big institutions and only聽聽
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30 percent is traded by individual investors like聽
you and me and for a majority of these large cap聽聽
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stocks they're mainly owned by institutions聽
for more videos check out the playlist on聽聽
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stock investing terminologies as well as a聽
playlist on stock investing for beginners
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