So, I have seen some postings on this board wondering about the price behavior in SFI. I certainly have been wondering why we've had a strait march down from $4 to $2.50 whether the market was up or down. Clearly, there has been a big seller(s). That said, volume has almost completely dried up. I've wondered whether Franklin has been a seller and have been waiting to see the 13G but nothing comes. Now something else has occured to me given SFI's price action today (i.e. up 8% on a down day in the market and for REITs). The Russell rebalancing has been happening all month. On 5/29 The Frank Russell company which manages the Russell 1000 and 2000 indices started the process of rebalancing them. SFI because of its dramatic drop in market cap is moving from the Russell 1000 to the Russell 2000 index. Typically such a switch causes buying of a company's shares because more assets are indexed to the Russell 2000 than the 1000, but I'm wondering if iStar's now tiny market cap is making it different this time.
KBW's analysis says that the rebalance should cause net buying of about 4 million shares in SFI. This should have been happening over the course of the last month and will be final by the close TODAY.
I think its possible that given the dramatic change in assets out there and the massive shrinkage in SFI's market cap, that there's net selling not buying. We'll find out after today. If the stock stops going down after today then maybe this is part of the dynamic. If it resumes the slide downward, then well, someone may know something we don't or they're really stupid. (both of which happen all the time).
Though this does not address rebalancing as it relates to SFI and others being reassigned to one indes vs. having previously been in another, this link identifies the preliminary additions and deletions to Russell 3000
>>>KBW's analysis says that the rebalance should cause net buying of about 4 million shares in SFI. This should have been happening over the course of the last month and will be final by the close TODAY.
Guess what, there was a 5M share book-keeping transaction right after the close.
Short interest also increased for the period 5/30 to 6/15, the first increase in SFI short interest since mid-March (5 straight bi-weekly decreases). Shorted shares increased from 18.99MM to 19.41MM, about 2.2%, 420,000 shares overall. That averages 38K shares shorted for the 11 trading days, not that large a number but the daily volume has been coming down. Who knows if this has a material impact on the daily price, we shall see what the next month brings regarding the short interest trend.