Don, in addition SNDK is particularly attractive for individual investors, as many of the large funds simply cannot afford to bother with a small position in a stock like SNDK. And if they tried to buy a large position, say, 200,000 shares or so, they would end up having to pay too much relative to the going market price.
The fact that funds like the Magellan, or CREF (College Retirement Equities Fund) really can't buy shares in a company as small as SNDK means that the shares remain attractive for individuals. When my clients ask me what I think of a stock like AT&T or GE, I tell them that while these companies have good and bad points, individuals need not invest in them, since the opportunities in smaller companies are much better, and at moderate risk. The other issue is that large companies with substantial institutional ownership are far more vulnerable to a correction. When institutional portfolio managers sense a correction coming or see a period of reduced growth or profits, they can unload quickly, usually well in advance of the individual, because they are able to react to the information more quickly.
This view is not radical. You'll find almost the same views expressed by Peter Lynch (formerly head of Magellan). |
