jdno,
Some interesting insight, I really do appreciate you sharing it. I knew you worked at a fund before you confirmed it.
I think we can both comfortably agree that the issue is not one of simple black and white and that position sizing at a particular fund is most certainly relevant.
Let me ask you a simple question, aren't we essentially dealing with the chicken and the egg here? How is the stock going to get to a point where it is trading volume at $30 absent enough shares for any institutions to buy? Regardless of whether a PM is seeking to buy 2% of a $100M market cap company, or 2% of a $200M market cap company, if the float is too small to allow them to even get an meaningful size position absent running up the stock many points, how is the manager going to even own it to begin with?
You know how many names most managers are following and they aren't going to spend a month trying to build a small position. Isn't the key for them to get enough to where their pregnant so to speak, but not have them be able to buy all they want unless they take it higher? Don't you have to get a fish on the line before you try and reel him in? Absent them being able to get a taste of the bait, you'll never sink the hook in them and they're gone. To me, the slightly larger float gives them something to actually bite on.
You and I both know that some stocks are simply too thin to attract many managers who want to be able to exit or enter within a reasonable time frame. Marathon has had a 50 cent spread in recent weeks at many times as you know. That type of spread and volatility is an impediment to most funds entering a position.
Long story even longer, I think we can agree that there is no perfect answer. I just believe that ultimately the split will attract more potential institutional buyers than the slight increase in the float will deter.
While I don't work at a fund like you, no less than three pm's today told me they really liked the move. I guess it's a matter of perception, and everyone is entitled to having theirs.
Again, I'm appreciative of your sharing your own insights. I find them insightful and absolutely worth reading and considering. I hope you will continue to share as you have.
