J. -- The 5% rule is an SEC regulation requiring anyone exceeding 5% ownership must file a form with the SEC, showing when that 5% was exceeded, and by how much. It would be unheard of for a person or group to acquire 5% or more in a short time, like one or two days.. That of course would cause a change in the share price, especially of total daily trading volume soared as a percentage of average trading volume. I should have made that more clear. Over a period of time, such as 30 days, if share purchases by a single person or group exceeded the 5% ownership level, it would barely move the stock, inasmuch as the daily move would be relatively small.
On the other hand, if a person or group announces its intent on acquiring over 5% of the shares, that published declaration would move the stock. This happened to QCOM a few years ago, when an outsider demanded a seat on the Board.
And there is also an exception. Years ago the SEC permitted Warren Buffett's Berkshire Hathaway to begin taking a major position in a stock without reporting it, in order to avoid premature changes in the share price. As far as I know, only Buffett had that privilege.
Typically, except for Buffett, an acquiring group will make small purchases that over an extended period won't change the share price more than a few percentage points. Typically, an investment firm or large institutional investor will only announce what they are doing AFTER they've already done it. This kind of announcement, often called a "conviction" recommendation, assures that other investors will climb on board, sending the stock upward. That's when I believe the average investor should avoid the stock altogether, because the surging price may only last a few weeks.
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