Like MCGC with its drop today or Full with it's run up. Since the indexes are getting out of the BDC mix in certain indexes it would almost seem like a fine time for PSEC to take out some BDC and consolidate the BDC market.
How do BDCs raise funds?
Who buys those seconds or ATM shares?
Big Buyers of shares are now out of the population of buyers- the indexes and those that mimic them.
Be interesting to see what the normalized volumes become after removal from indicies
Be interesting to see if the volatility moves up a bit.
To say nothing has changed is a bit simplistic and uninformed. Could have effects on the way the company raises capital.
It will effect how this trades - until June and beyond.
BDC specific indexes will take some of the "slack" , but how much of the 8% direct and ? % indirect small cap indexing.
Maybe PSEC starts using more debt and less from the ATM to fund - a positive in my view.
The business of running the business has not changed for sure, but the business of raising capital may have.
Your number (7%) sounds about right. According to a Barron's article that I was yesterday, index funds hold about 8% of all outstanding shares of all BDCs. I don't know how that breaks down for specific BDCs, but these funds are generally balanced. Further, these funds generally only own the "better" BDCs.
As slicktop noted, 43 million shares of PSEC were traded last Friday. Add at least another 10 million for higher than normal volumes a few days prior to this, and we are getting close to 17-20% of the float. Do you think someone already knew about BDCs beign droped from the Russel indexes as well? The idea of doing that has been in discussing for some time -- the "news" was not a surprise. In fact, analysts at Wells already had prepared comments. And articles like Barrons were not drafted after the "news." Point being, index funds may have alraeady rebalanced in advance of the Russel "news."
Really, look at the PSEC chart and see what happened to pps and volume with the S&P action. They just about have to wait until the end to dump or the indexes will not represent what they are supposed to be holding .
Expect lower prices and opportunities for real bargains between now and June's delisting. PSEC lost arround .50 cents after the S&P news came out until it was delisted on Feb 28.
I read the Russell would remove the BDC shares by June. I have no reason to think they are stupid and and want to waste money so they will sell a little at a time and not dump all at once.
PSEC traded 43,000,000 shares on Friday alone when it was delisted by S&P, Russell indexes have more BDC shares and the volume will be even greater..........
There are two time proven ways to handle this drop in PPS due to BDC dropped from indexes. One is buy some more when it settles and the other is roll over and take a nap. Those that sold are looking for a chance to buy back in lower.
.......owned by the top Institutional owners, as listed on Yahoo, of which the indices involved in the discontinuation mentions are part, represents less than 7% of the total share count, or roughly 21 million shares. How long does it take to dispose of 21 million shares, assuming all the index funds do so? Not long at all, based on the average daily volume. The conclusion is that this downdraft probably will be short-lived, even if ancillary "panic" sell-off volume is included.