Guide
Who is most likely to buy a microcap next
We tested what predicts a fund's first purchase of a small company. One signal carried most of the answer.
The test
Krypton AI built a model to rank which of about 5,700 institutions would buy a given company next, from Form 13F data. We tested it on 6,000 real purchases it had never seen, across the four quarters to March 2026.
The baseline matters more than the model. Simply naming the funds that open the most positions every quarter puts a real buyer in the top five 26.6% of the time. A few managers buy hundreds of small positions a quarter, so a list that looks smart can be nothing more than those names.
Former holders come first
The strongest single signal was a fund that had owned the stock before and sold it. It was worth about four times every other signal combined. How long the fund held it, and how large the position got, sharpened the ranking further.
It makes sense once you see it. A fund that held a company for two years already knows the management, the filings and the story. It sold for a reason. When the reason changes, it is the cheapest possible buyer to bring back.
The next signals were the company's neighbourhood, meaning the other stocks its holders own, and what the company is.
What did not work
We expected funds that buy a company's stock offerings to be likely buyers in the open market. Across 205,882 prospectuses, it added nothing. A fund that buys a placement already shows up as a holder, so the offering says nothing new.
How much to trust a ranking
On all companies, the model put a real buyer in its top five 45.5% of the time. On the smallest companies, with under $25 million of institutional money, that fell to 37.0%. In quarters where only one institution bought, it was 24.7%. Any honest list of likely buyers should say which of these numbers applies.
A score is a ranking, not a probability. The top of the list is where to start calling, not a forecast.
What a company can do with this
- Pull every Form 13F that has ever held your CUSIP and list the funds that sold out. Keep the ones that still run money by picking stocks.
- Take index funds and quantitative funds off the list. They do not take meetings.
- Measure positions from reported share counts times the quarter-end price. The value field in a 13F is reported inconsistently and can be off by a factor of a thousand.
- Tell each former holder what changed since they sold. That is the one piece of news they have not heard.
Sources
- SEC Form 13F data sets, quarters to March 2026
- Krypton AI buy-side model, held-out test of 6,000 institutional purchases, September 2026
Krypton AI publishes no valuation, price target or recommendation on any company.
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