Well, that was a terrible month for Cadiz Inc's share price. I'm actually (almost) starting to feel bad for Cadiz.
A couple of facts:
* In June, Cadiz Inc.'s stock price declined by almost 35%. The decline is around 45% for the year.
* The short interest is at an (at least) 52 week high (possibly multi-year) high. As of 6/14/2013, the short interest was at 1,540,584, that's up 30% from the recent low in April.
* The share dropped below the so important $5 level, which is clearly a "sell" sign for many mutual funds (simply because of internally imposed rules).
* CDZI was removed from the Nasdaq OMX Water Index which, by the way, I don't think has anything to do with the $5 level (since the decision was made before they fell below $5, and, since this is a decision the Nasdaq only makes once a year, it likely goes back a while).
The last point (OMX Index) has probably contributed to falling below $5, and that, in turn, has apparently led to a cross the board, heavy sell-off among (some) index funds and many mutual funds. You could clearly see this looking at the heavy, and very unusual volume over the past two weeks (check out today's volume!). Note that not all index funds are tracking the Nasdaq OMX water index, so there will still be index fund holdings for funds that track the more general Nasdaq index.
Another bad news for longs is that the "departure" of mutual and index funds. Specifically index funds (who have no choice but to buy a stock that's part of a specific index) have contributed to the market activity in CDZI in the past. I expect the overall volume go down way below where it used to be.
I see only one possible positive development for CDZI shareholders: I do not believe that the lawsuits against Cadiz Inc. will be successful. Most of them seem to be rather based on "procedural merrits" that I don't believe have a chance to succeed. I think the best shot at winning a lawsuit is the one by Tetra Technologiies, Inc.
Further to your point - notice that the volume yesterday, June 28, 2013, was about 1.9 million shares traded. Clearly, there are / were some institutional investors who decided to do some window dressing and did not want to show that they owned CDZI on their reports to their fund holders. Interesting though, IMHO, the 1.9 million shares were most likely picked up ( bought ) by other institutional investors.
I think the majority holders had to step up and pick up those shares, simply because they don't have another choice. Had they refused to do so, the share price could potentially have totally plummeted. Those managers have been holding shares of this company for years and have been losing their investor's/companies money for a long time. In 2007 CDZI's stock was traded for around $27! Since then, CDZI has lost more than 80% of its share price. If they bailed now, the responsible funds managers would have some serious explaining to do, as to why they waited all those years and watched the company and stock decline! It's the classical case of throwing good money after bad...
As weird as it may sound, I actually think that, albeit risky, it might be a good time to maybe consider betting on a short-term rebound of CDZI, which could happen in response to the announcement of some additional (or all) dismissed lawsuits. Dismissal of all lawsuits could be perceived to somewhat reduce the level of uncertainty associated with this project. I actually find my own statement somewhat shocking because it is the first time (I believe) I have actually made any positive point in association with Cadiz Inc. (note that this only relates to the short-term share price of Cadiz, not the project itself, which I think is totally wrong and not viable!). But I think the heavy sell-off (I explained my opinion about it above) is due to mainly technical/rule reasons, and is likely to abate soon.
Fundamentally, I'm absolutely convinced that eventually, someone is going to ax this project and that the share price is going to go to $0+\epsilon share price.
My most likely scenario is still that this will be caused in response to a decision by the board of directors of the MWD, and be influenced by/related to the (likely) introduction of an MCL for Chromium 6 in California (which I expect around August 2013). I don't think the MWD will allow water in their aqueduct that has a Chromium 6 levels an order of magnitude above what I believe the final MCL will require. The second most likely scenario that I can imagine is that eventually, the BLM, will require a NEPA review. This will not necessarily kill the project, but will (IMHO) wipe out common.
Disclaimer: I was never (at no point) short CDZI, and I was only long once (regrettably, for a very short time during last year's pump-and-dump, at a price of ~$10). Shortly after that time, I recovered my losses (and actually turned a profit) by buying and later selling $10 puts. I will never go long CDZI again. I do not currently own any CDZI options, and I will never buy/sell CDZI options again.