anyone have any experience with an ETF buying or selling a stock having a considerable effect?
Most ETFs are linked to an index, so the reconstitution of the index is what impacts the stock. The particular ETF along with every other index fund tracking that index collectively impacts that stock when the index is forced to buy or sell a stock. What do you mean by manipulation?
I have a stock where an etf owns 20% of it; i’m wondering as the open ended fund rebalances-or reconstitutes–the stock moves with it one way or the other. correlation is .5 regressed etf on stock is r2 of .3, so not enough to say it is moving it
I’m just wondering how this ETF got to own 20% of the outstanding shares. I’m guessing it’s a concentrated ETF, possibly tracking an emerging market index? Care to share what the ETF and/or stock are? I would imagine that if they owned 20% of the shares that they would have a fairly substantial impact on the stock if the index changes. Also depends if the ETF is fully replicating the index or has some latitude to sample.
they own 20% of the float, so not shares outstanding - other factors have taken down the float shares, too. so basically when you have any action in the stock, on top of the etf, the thing tends to move fast and hard. drop me an e-mail email@example.com, I’ll show you an interesting piece.
This happens pretty frequently in small cap stocks, especially if the liquidity isn’t great. It’s become even more common with the proliferation of ETFs targeting tiny sectors. Look at PHO - this is one of the worst because it’s actually become pretty successful in it’s own right in terms of assets and trading volume. It’s got 2.4% of its $2.3B in BMI - nice little company with a market cap of nearly $700M. However, trading only 128,000 shares per day, the ETF has nearly 10 days average volume of this stock, not to mention about 9% of the company.
ohhh I am talking about PHO - what is the deal here? Couple stocks in there trading 25x and 32x 08! That’s in line with google and apple, respectively… can the etf be blamed?
The ETF might be responsible for these guys trading 5-10% above where they would otherwise, but I don’t think there’s any sort of trading opportunity here.