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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (6968)	2/29/2000 10:39:00 PM
From: David Graham	Read Replies (3) \| Respond to of 24042

TP, A big issue with the index inclusion is the availability of shares. It was a problem with YHOO as so much of Yahoo is apparently still held by management and venture capitalists (CMGI owned a billion dollars worth of it in the fall, they got it (I think) from their Geocities stake). This will likely be a problem for JDSU, according to 13-G's and the 10-Q filed in 2000: Furukawa Electric has 72.3 million shares American Express has 20.4 million Putnam has 14.6 million, and KK, JS and other Directors have 8.3 million. This does not include the shares in the QQQ trust. It was worth over $6 billion in December, JDSU is 3.79% of the Index, so they likely have about (6B * 3.79%) / JDSU price of approx 250 = roughly 900,000 shares. Then there's all the mutual funds. Also, over 104,000,000 shares were actually JDS Exchangeable shares traded in Canada, so they aren't easily available to U.S. index funds. Therefore, out of a pre-split, pre-ETEK, U.S. float of 250 million, approximately 116.5 million shares can be accounted for by the five groups I mentioned. The S&P is cap-weighted, so the more expensive JDSU gets the more shares Vanguard and the gang will have to buy. I want to be on the selling side of that equation. It'll be YHOO all over again. And every time the stock goes up, the more volatile it'll be. The argument about transfers in the family makes more sense when a stock is migrating from the S&P 400 to the 500. Otherwise, why would an indexer have so many shares of a non-Index stock sitting around. Moving it out of active funds only reduces the performance of active funds, so that's not really in the manager's best interest. They're also not going to move stock from NAZ index funds to S&P 500 funds. (These calculations were done quickly, if anyone can add to, or correct, the numbers I'd appreciate it. For example, does anyone know what the Fidelity and Janus holdings of JDSU are?) David