Look For Management Ownership Of Shares When Studying Stocks.(B)(INVESTOR'S CORNER)

Byline: NANCY GONDO

Would you rather buy a product from someone who owns and uses it or a salesman who simply hawks it?

Likewise, it pays to favor firms that are heavily owned by management. You want to make sure company officials stand to gain from boosting shareholder value. By owning shares, they show confidence in the stock's potential to succeed.

There's no minimum percentage management should own -- just make sure it's more than zero. Since big-cap stocks tend to have a large number of shares outstanding, even a small amount of shares owned by management is OK.

For instance, managed health care giant UnitedHealth Group, with a $72 billion market cap and over 1.3 billion shares outstanding, is 4% owned by management.

But laser-based medical gear maker Cutera, which has a market cap of $313 million and about 12 million shares out, counts company execs as owners of 39% of those shares.

In general, you want to see smaller-cap stocks more heavily owned by management. Small caps often escape notice by fund managers and retail investors. They stand to reap more benefits if the stock price goes up and if they invest the gains back into the business and grow larger.