What Are Low Float Stocks and How to Find Them

Stock float refers to the number of shares a company has available for trading in the open market. Understanding this concept is important for individuals seeking to analyze stock behavior. When a company has a relatively small number of shares readily available for public purchase, these are often referred to as low float stocks. The limited supply of shares can influence how these stocks trade on exchanges.

Understanding Low Float Stock Characteristics

Stock float represents the total number of a company’s shares actively available for public trading. This excludes restricted shares held by insiders, employees, or long-term investors, which are not freely traded. Low float stocks typically have a public float of less than 10 to 20 million shares, though this can vary by market capitalization and industry.

Low float stocks often exhibit heightened price volatility. Due to limited supply, even moderate shifts in buying or selling pressure can lead to significant price movements. A small trading volume can disproportionately impact the stock’s price compared to a high float stock.

Several factors contribute to a low float. Founders, early investors, or institutional entities often hold a substantial portion of a company’s shares, removing them from tradable supply. Shares may also be subject to lock-up periods after an initial public offering (IPO), preventing insiders from selling for a specified duration and temporarily reducing the float.

Essential Metrics for Identifying Low Float Stocks

Identifying low float stocks requires examining specific financial metrics that provide insight into a company’s share structure and trading activity.

Shares Outstanding represents the total number of a company’s shares issued to investors, including those held by insiders, institutions, and the public. This figure provides the broadest view of a company’s equity base.

Public Float, often called “Float,” quantifies the number of shares available for trading in the open market. This metric excludes shares held by insiders, employees, and other restricted parties. A lower public float means fewer shares are accessible for public trading.

Average Daily Volume measures the typical number of shares traded each day, assessing a stock’s liquidity relative to its float size. A low float stock with consistently high average daily volume indicates active trading and demand, amplifying price movements. Conversely, very low average daily volume might indicate limited interest.

Short Interest represents the total number of shares sold short by investors. High short interest, especially as a percentage of the public float, can force short sellers to buy back shares to cover positions during a rapid price increase, potentially leading to a “short squeeze.” This can cause rapid price increases in low float stocks due to limited supply.

Where to Access Stock Data

Obtaining the necessary data to identify low float stocks involves accessing various reliable financial information sources.

Many financial news websites provide comprehensive company profiles with key share statistics. Platforms like Yahoo Finance, Google Finance, Bloomberg, and Reuters aggregate data from stock exchanges and company reports, offering an accessible starting point. These sites feature sections for individual stock quotes, where users find details like shares outstanding, public float, and average daily trading volume. Cross-referencing data from multiple sources is advisable for accuracy.

Brokerage platforms also serve as a primary source for stock data, integrating research tools directly into their trading interfaces. Most online brokerages offer extensive company research sections that include detailed financial statements, analyst reports, and share metrics. These platforms often provide real-time or near real-time data, making them efficient for investors actively tracking stock information.

For the most authoritative and detailed information, investors can consult SEC filings through the EDGAR database, maintained by the U.S. Securities and Exchange Commission. Companies publicly traded in the United States are required to file periodic reports, such as the annual Form 10-K and quarterly Form 10-Q. These filings contain audited financial data, including precise figures for shares outstanding and often details regarding restricted shares and insider holdings, which can be used to derive the public float.

Utilizing Stock Screeners to Find Low Float Stocks

Stock screeners are powerful tools for filtering publicly traded companies based on specific criteria, making them indispensable for finding low float stocks. Available through financial news websites, brokerage platforms, or dedicated data providers, screeners allow users to input desired metrics to narrow down the investment universe.

To use a stock screener effectively for low float stocks, set criteria based on previously discussed metrics. A primary filter is “Float” or “Public Float,” where a maximum value can be specified. For instance, set this filter to less than 20 million shares, or even 5 million, to target companies with limited stock supply. Adjusting this range allows for broader or narrower searches.

Average Daily Volume measures the typical number of shares traded each day, assessing a stock’s liquidity relative to its float size. While a low float indicates scarcity, sufficient trading activity is often desired to ensure some level of liquidity. Setting a minimum average daily volume, such as 500,000 shares or 1 million shares, can help filter out extremely illiquid stocks. This ensures that even with a limited float, there is still consistent trading interest in the company.

Individuals can also incorporate “Shares Outstanding” as a filter, often setting a maximum value, as companies with very low floats typically also have a relatively small number of total shares issued. Including “Short Interest” as a percentage of float can help identify stocks that might be candidates for a short squeeze, by setting a minimum threshold, perhaps over 10% or 20%.

After applying these filters, the stock screener generates a list of companies that meet all the specified criteria. The output typically includes the relevant metrics for each stock, allowing for further review. Individuals can then refine their search by adjusting the numerical ranges of their filters, such as lowering the maximum float or increasing the minimum average daily volume, to produce a more targeted list that aligns with specific preferences for liquidity and scarcity.