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Momentum Trading by Institutions

Author

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  • S.G. Badrinath
  • Sunil Wahal

Abstract

We document the equity trading practices of approximately 1,200 institutions from the third quarter of 1987 through the third quarter of 1995. We decompose trading by institutions into the initiation of new positions (entry), the termination of previous positions (exit), and adjustments to ongoing holdings. Institutions act as momentum traders when they enter stocks but as contrarian traders when they exit or make adjustments to ongoing holdings. We find significant differences in trading practices among different types of institutions.

Suggested Citation

  • S.G. Badrinath & Sunil Wahal, 2002. "Momentum Trading by Institutions," Journal of Finance, American Finance Association, vol. 57(6), pages 2449-2478, December.
    • Handle: RePEc:bla:jfinan:v:57:y:2002:i:6:p:2449-2478
    DOI: 10.1111/1540-6261.00502
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    References listed on IDEAS

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