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Technology Stocks : The New QLogic (ANCR)
QLGC 16.070.0%Aug 24 5:00 PM EST
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To: nic who wrote (23030)6/26/1999 11:35:00 AM
From: Ocean_Joe  Read Replies (2) of 29386
 
Some perspective on the 500ML Market Cap Effect.

Aftbaz reminded us that many funds have self-imposed threshold "size" requirements or profiles that a compnay must meet before the fund can (or will, or may) invest in a subject company.

We do not know if the funds automatically or mechanically invest once the particular threshold is hit. Regardless, this threshold is certainly known to the MM who handle such orders, and surely one must expect a MM (and astute others) to accumulate in advance as soon as that MM believes a reasonable probability that the threshold will be hit that week, and/or the next day, and/or even that day.

It is entirely logical to ascribe the entire weeks accumulation (by funds via MM, and/or by MM on their own account, but accumulation none the less) was all precipitated by ANCR's forward and steady march towards that threshold number.

ANCR was climbing not only on its raw business merits but also on the logical reason that it was becoming a fund target.

And the above buying does not preclude effects such as 1)the analyst coverage that many believe is imminent; nor 2) the National Nasdaq Market listing (also imminent); nor 3) more OEM's; nor 4) increasing general sector awareness; nor 5) etc.

Aftbaz is due credit for bringing this to our attention. A rigid price analysis on a specific day seems almost silly now that I think about it because nothing precludes MM and others from buying in anticipation, assuming arguendo the fund were rigidly bound to wait for the market to first hit the magic number.

Ocean_Joe
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