I can only speculate that the block size has increased due to the following:
1. Some people panicking and dumping all or most of their holdings.
2. Aggressive buyers, seeing a good deal, are willing to buy larger blocks if the price is low enough.
3. SGI has become one of the most prominent VSE trading stocks, and more people are playing it than before. That brings more liquidity to the stock (even with the same number of shares outstanding than before). You can now buy or sell a larger quantity of stock in fewer transactions.
My theory about the volatility of the stock, which also applies to other VSE high-profile stocks:
1. These type of stocks usually go up in the few days before the market expects a good-news announcement from the company, and then they drift lower from the date of the announcement (or shorttly thereafter) until just before the following expected announcement. The reason for this is that stocks are not traded in a vacuum; stocks compete against other stocks. Lets say stock A just went up and the good-news announcement was made. Since stock A will not move much further until, say, next month when the next announcement is expected, I would sell stock A and buy stock B, which is expecting good news next week. Then I would move from B to C, until, eventually, I would go back to A when A has settled down, awaiting the next development. This migration would cause A to drift lower for 2-3 weeks until people come back to it. Meanwhile, from my point of view, the result of the migration would be that I keep selling the stock that just went up and is about to drift lower and buy the one that just went down and is about to go higher.
2. Applying this to SGI, the week before the Seoul announcement people were buying it; it went up and then, after the announcement, started selling it at its peak price. The next update on the projects is not expected until the Annual Meeting (Kim Hart believe it is a safe assumption). There are still two and a half weeks to go, an eternity by fast-moving stock standards. That gives people enough time to sell it this week, go into something else and, after SGI's resulting drop, they will come back during the first week of February.
3. If everybody were to do this, the stocks impacted would have huge moves, like SGI. Of course, this strategy would be defeated if the company makes a surprise good or bad announcement out of the blue, which happenes sometimes.
This is just one theory; other have other opinions. What is yours?
Mayer |
