Investor's Corner: Accumulation/Distribution Shows Fund Favorites

Institutional investors like mutual funds, pension funds and banks are responsible for roughly 70% of the trading activity in most leading companies. They are the powers behind the big, high-volume price swings that can make or break a stock.

Figuring out which stocks they're buying and which ones they're selling can improve your chances of investment success.

IBD's Accumulation/Distribution Rating lets you see at a glance which stocks big investors like -- and which ones they're shunning. The rating is based on the stock's price and volume action over the past 13 weeks.

The ratings range from A to E. An A or B rating indicates that a stock is under accumulation by institutional investors. A grade of C shows a more neutral posture. A rating of D or E indicates that the biggest investors are bailing out.

IBD lists each stock's Acc/Dis Rating in the daily stock tables. Stocks featured elsewhere in the paper -- in Stocks In The News or elite lists like the IBD 100, for instance -- will also include Accumulation/Distribution ratings.

As a rule of thumb when looking for investment candidates, stick with stocks with Accumulation/Distribution Ratings of B or better.

Consider Heartland Payment Systems (NYSE: - ). The company, which provides credit- and debit-card processing and payroll services, went public a year ago.

Though it has pulled back to its 10-week moving average, its A- Accumulation/Distribution Rating (point 1) indicates that big investors are still snatching up shares.