Q: Is a company’s “float” the same as its outstanding shares?
A: Nope. The term “shares outstanding” refers to all shares of stock that a company has issued. Very often, some are “restricted” — for example, if they’re held by insiders (such as founders, executives and/or employees) who cannot sell until the shares vest. Those folks typically hold on to their shares for a long time. The remaining shares are available for trading, are owned by the public, and change hands more often. They’re the float.
Imagine Scruffy’s Chicken Shack (ticker BUKBUK), with 100 million shares outstanding and insiders owning 30%. That leaves 70%, or 70 million shares, as the float. It’s good to check out a company’s float, because if it’s small (”thinly traded”), the stock can be volatile. With a limited number of shares, even moderate buying (or selling) activity can push the price up (or down) sharply.
Small savings add up
Most of us need to save money — to pay off debts, pay for college or sock away for retirement. That’s easier said than done, but saving significant sums isn’t impossible. One strategy is to save small sums — repeatedly.
The classic example is that costly cup of coffee many of us buy daily. If you’re forking over, say, $4 for each one and you buy one every weekday, that’s costing you about $1,000 per year! Brew your own coffee at home (or at work) and you can save a lot.
If you’re a smoker, you have a powerful money-saving opportunity: Kick the habit. A single pack of smokes costs $8 or more in many places, so one pack a day can cost $3,000 or more annually for lots of smokers. Two packs a day? Double that. Better still, quitting can add years to your life, and may reduce your overall health care spending as well.
Many of us enjoy meals at restaurants regularly. If you spend around $50 each time you (and perhaps your spouse or family) eat out, and you do so twice a week, that’s costing you roughly $5,000 annually.
Little sums saved regularly will add up to large sums that can make your financial future more secure.
MY DUMBEST INVESTMENT
My dumbest investment? I lost money on Mattel — but it was still good to be part of a great American company.
The Fool responds: You have a great attitude, recognizing that when we buy stock in companies, we become part owners and share in their good or bad fortune.
Mattel isn’t a hopeless disaster, but it has been struggling in recent years and posting losses. That’s due in part to the bankruptcy of Toys R Us, which had been a major sales channel, and to competition from low-cost producers in China. Mattel’s shares were trading above $30 a few years ago, and were recently near $10 per share.
Burdened with close to $3 billion in debt and less than $200 million in cash and equivalents, it has rebuffed buyout offers from MGA Entertainment and Hasbro. It even slashed its dividend by more than half in 2017, only to fully suspend it soon after.
All is not lost, though, and some see the company starting to turn itself around. It does have valuable assets in brands such as Barbie, Hot Wheels, American Girl and Fisher-Price, and sales have recently been growing, particularly internationally.
The Motley Fool Take
Plunk funds in Splunk?
One of the benefits of the new digital economy is the large amounts of available data that can shed light on what’s happening within an organization’s operations. Companies often need data analytics software to turn that data into actionable insights, and Splunk (Nasdaq: SPLK) is a leader in that field, taking in a hefty $517 million in its last quarter, up 33% over the previous year’s level.
Splunk helps businesses organize and analyze both data locked up in old legacy computer systems and data generated by newer cloud-based operations. Its analytics engine has a broad range of uses, from monitoring equipment connected to a network, to payment-processing activity, to coordinating cybersecurity efforts.
Its stock is down from its summer highs, in part because management projected negative operating cash flow of $300 million for fiscal 2020 — driven by a new pricing structure and a faster-than-expected shift from perpetual licenses to cloud-based renewable subscriptions.
Over the long term, that shift will mean more predictable revenue streams, with Splunk adding more than 400 new enterprise customers in the first quarter of fiscal 2020 alone, including Chipotle Mexican Grill, Cerner and Slack.