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Prospect Capital Corporation Message Board

  • zugzwang1648 zugzwang1648 Mar 5, 2014 8:28 AM Flag

    Percent of Float....


    .......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.

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    • Looking ahead, industry observers are now waiting from Russell Indexes, which has a heavier stake in the group, on whether or not the index provider will follow S&P’s move. Some BDCs’ ownership in Russell index-related funds see as much as 38 days’ worth of average trading volume.

    • 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."

    • 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..........

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