Stock Float

Q: What is a stock’s “float”?

--E.C., Sacramento

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A: The float refers to the portion of shares outstanding that are available to be traded by the public. It’s good to pay attention to this number, especially with smaller companies, because stocks with small floats (referred to as “thinly traded”) can be extra volatile.

Consider Muriel Siebert Inc., the discount brokerage. It has roughly 22 million shares outstanding, but according to a proxy statement filed with the SEC in November, Muriel Siebert herself owns more than 20 million of them. The float is only about 2.3 million shares. This means that a spike in demand can quickly send the stock price soaring because supply is limited. Observers say many Internet stocks with a small float--or simply a small number of shares outstanding--have been pushed up for the same reason.

A sudden downdraft is somewhat less likely. Muriel Siebert wouldn’t sell many of her shares at one time precisely because a sudden increase in supply would reduce the price she could get.