Walter,
I have to tell you that you have done a nice job scouting out these 13F reports.
For those who are unfamiliar with these SEC reports, any investment manager holding at least $100 million in assets for the benefit of others is required to report all holdings in a quarterly statement called a 13F report. These are due 45 days after the end of a calendar quarter. So those institutional shareholders in e.Digital as of September 30, 1999 will be filing around November 15, 1999.
Now keep in mind that only investment managers with at least $100 million are required to file these reports. Since e.Digital is still very small in market capitalization, it is likely that it is also being held by non-13F institutional shareholders who specialize in small cap stocks.
Because these non-13F-filing funds, by definition, have less than $100 million under management, they can hold 50 to 100 positions in very small companies without going over the 5% level that most institutional investors want to avoid. For example, if one such manager had $80 million to invest in 50 companies, each position would be $1,600,000. In the case of e.Digital, that would buy about 1.5% of the stock. However, a larger manager, with $800 million to invest in 50 positions, would be forced to purchase 15% of the stock if they wanted equal-sized positions in the companies in the portfolio. This effectively rules out e.Digital as a candidate for a large fund's portfolio.
Of course, some managers will take a very tiny position in a small company with good prospects as a way of "bookmarking" that potential investment for future expansion. I think that is what is beginning to happen here. |
