Float refers to the total number of shares of a company’s stock that are available for public trading.
Key Characteristics
- Publicly Traded Shares: Float only includes shares that are publicly traded, excluding shares held by insiders, institutions, and other restricted holders.
- Available for Trading: Float represents the number of shares that are available for buying and selling on the open market.
- Excludes Restricted Shares: Float does not include shares that are restricted from trading, such as those held by company insiders or institutional investors.
Importance of Float
- Liquidity: Float is an important indicator of a stock’s liquidity, as it represents the number of shares available for trading.
- Volatility: A stock with a small float may be more volatile, as a smaller number of shares can lead to larger price movements.
- Investment Opportunities: Float can impact investment opportunities, as a larger float can provide more opportunities for investors to buy and sell shares.
Example
- Company XYZ: Company XYZ has a total of 10 million shares outstanding, but 2 million shares are held by insiders and institutional investors. The float would be 8 million shares (10 million – 2 million).
Related Concepts
- Market Capitalization: Market capitalization is the total value of a company’s outstanding shares, including both publicly traded and restricted shares.
- Free Float: Free float is a measure of the number of shares available for trading, excluding shares held by insiders and institutional investors.
- Share Turnover: Share turnover is a measure of the number of shares traded in a given period, relative to the total number of shares outstanding.
By understanding the concept of float, investors can gain insights into a company’s liquidity, volatility, and investment opportunities, making more informed decisions about their investments.
Winchell House 
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