Elephants

Elephants is slang for large institutional investors that can move markets on their own. Elephants have the funds to make high-volume trades. Due to the large volumes of securities that elephants deal in, any investment decisions that they make could have a large influence on the price of the underlying financial asset.

Think of a swimming pool: If an elephant steps into the pool (buys into a position), the water level (stock price) increases; if the elephant gets out of the pool (sells a position), the water level (stock price) decreases. In comparison to the elephant's influence on stock prices, the effect of an individual investor is more like that of a mouse.

Examples of elephants are professionally managed entities like mutual funds, pension plans, banks and insurance companies.

Contrarian investors specialize in doing the opposite of the elephants -- that is, buying when institutions are selling, and selling when institutions are buying.

An institutional investor is a nonbank person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions.

An institutional investor is an organization that invests on behalf of its members. Institutional investors face fewer protective regulations because it is assumed they are more knowledgeable and better able to protect themselves. There are generally six types of institutional investors: endowment funds, commercial banks, mutual funds, hedge funds, pension funds and insurance companies.

Because institutions are the largest force behind supply and demand in securities markets, they perform the majority of trades on major exchanges and greatly influence the prices of securities.

Retail investors buy and sell stocks in round lots of 100 shares or more; institutional investors buy and sell in block trades of 10,000 shares or more. Because of the larger trade volumes, institutional investors avoid buying stocks of smaller companies and acquiring a high percentage of company ownership.

A money manager is a person or financial firm that manages the securities portfolio of an individual or institutional investor. Typically, a money manager employs people with various expertise ranging from the research and selection of investment options to monitoring the assets and deciding when to sell them.

In return for a fee, the money manager has the fiduciary duty to choose and manage investments prudently for his or her clients, including developing an appropriate investment strategy, and buying and selling securities to meet those goals.

The largest pension fund in the world, as of March 2018, was the U.S. Federal Old-Age and Survivors Insurance Trust Fund (Social Security), with nearly $2.9 trillion in assets under management.

The largest money manager, as of the end of 2017, was BlackRock, with nearly $6.3 trillion in assets under management.