msnbc.com
In the case of Amazon.com, this has produced a
bizarre outcome indeed: a Market Guide tally, as reported
on its Web site and on Bloomberg as well, of a market float
of roughly 19.4 million shares. Investors Business Daily uses
a similar but not identical calculation, and is currently
reporting a roughly similar number of approximately 19
million shares in Amazon.com's market float. Bloomberg's
number from Technimetrics is likewise in the same ballpark:
18.39 million as of Sept. 9.
But Amazon.com's own spokesman for investor
relations last week told me the company's market float may
actually be as little as only 10 million shares, and that no one
at the company really knows for sure.
In fact, Amazon.com's float is 10 million at most. A
count of every Amazon.com stock registration and Form
144 filing since 1997 suggests that, even adjusting for a June
1998 two-for-one stock split and the exercise of employee
stock options, there appears to be no more than 9.5 million
shares in Amazon.com's authentic, real-world public float.
Officials at Investors Business Daily, Bloomberg and
Market Guide now say they're re-examining their
methodology in light of the discrepancy.
Who in fact owns those shares? Conventional wisdom
maintains that most of Amazon.com is in the hands of
individuals. The Microsoft Investor Web site, for one,
reports that institutions only own 22 percent of the
company's shares. But this is 22 percent of Amazon.com's
49.4 million total shares outstanding - and is probably too
high in any case since it means that institutions own 11
million shares when that is more than are even in the float.
In fact, the ownership of the float is not that hard to
establish. From so-called 13F filings with the Securities &
Exchange Commission, it appears that as of June 30, more
than 8 million shares, or nearly 85 percent of the public
float, was in the hands of just 10 mutual funds and other
institutions. One of these funds is listed in yet other SEC
filings as the current holder of nearly half the total float in the
above-mentioned super-hot IPO, Broadcast.com.
Such concentrated positions in thinly traded stocks like
Amazon.com and Broadcast.com give a small number of
institutional holders enormous influence over the price of
such shares - influence that can help propel a company
with shaky fundamentals to interstellar valuation multiples at
the expense of misguided short-sellers, then leave hapless
individuals holding the bag as they scramble to grab a hot
stock, even as the funds quietly sell out into the rising price.
Says a former short-seller for financier Carl Icahn, who
now runs one of the Web's most popular financial research
sites, "I'm totally convinced there's a lot of games-playing
going in the shares of these stocks. I can recognize it when I
see it."
For investors who thus think Tuesday's rebound in the
Dow Industrials signals a new buying opportunity for
Internet stocks, what else is there to say but, "Beware."
Without reliable data regarding the market floats of these
and other recent IPOs, the deck is simply stacked too
strongly against them.
|
