How much of this tech selloff is window dressing?
If it is a lot, does this mean the bottom?
Fund managers blamed for losses
Window dressing draws the blinds on tech stocks
By Craig Tolliver, CBS.MarketWatch.com
Last Update: 6:53 PM ET Mar 30, 2001
SAN FRANCISCO (CBS.MW) - Mutual fund window dressing may have played a part in the fall of several technology stocks this week, StockTradersDaily.com said Friday.
"Window dressing" is a quarterly occurrence whereby fund managers will scoop up some winning stocks and sell some losers in the last week of the quarter to make their portfolios look better.
Shares of several tech and telecom companies such as Ciena, Veritas Software, and Juniper were slashed amid heavy institutional selling during the week, according to the Web site - which caters primarily to aggressive traders.
Ciena lost half its value in the week with 91 percent of trading performed by institutional traders, suggesting heavy institutional selling, according to Stock Traders. In the company's last quarterly report, Ciena (CIEN: news, msgs, alerts) revealed institutional ownership of 67 percent.
Ciena closed up 56 cents Friday to $41.75.
"It was very interesting to watch the funds selling Ciena so aggressively," Stock Traders Daily CEO Thomas Kee told CBS.MarketWatch.com.
"Ciena was actually increasing their earnings estimates and revenue targets for the year. It's telling us that the funds aren't paying much attention to who the companies are or what the companies do. What they're really paying attention to is what has performed well in the market and what are my shareholders going to look at."
Similarly, Veritas Software and Juniper Networks also traded lower in the week, off 29 percent and 50 percent, respectively for the period. Stock Traders noted that institutions amounted to 71 percent of trades in Veritas (VRTS: news, msgs, alerts) and 52 percent of trading in Juniper (JNPR: news, msgs, alerts) .
Conversely, window dressing activities can also push stocks up, though Kee said he hasn't witnessed it in the last few days.
"When we last saw that, is when the Dow was severely beaten up and then rallied 800 or so points. That had a lot to do with funds having to get in and reinvest money that they had sold earlier," Kee said, suggesting that managers awash in cash needed to show their investors that they were fully invested.
Craig Tolliver is the mutual funds editor for CBS.MarketWatch.com in Los Angeles.
cbs.marketwatch.com
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This shows 82% institutional trades for CIEN this week, with 8% Retail, so I guess it is accurate? |
