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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Doc Bones who wrote (2057)	11/16/2000 9:30:15 AM
From: Biomaven	Read Replies (1) \| Respond to of 52153

Doc Bones, The whole notion of shifts in supply and demand for a stock that are unrelated to a company's fundamentals is a very interesting one. The addition of the stock to a substantial index is an interesting case. There is clearly a short term surge caused by the forced buying. That's not quite the end of it though - there is an ongoing effect caused by the index funds buying and selling in response to inflows and outflows of capital. This serves to link the stock more closely to the market as a whole. Further, the float of the stock is effectively reduced - there is simply less stock left for everyone else, although trading volume typically increases. The other side of the picture is the short term pressure you get when a substantial holder sells for reasons unrelated to the stock. A very good example is the recent sale of ITMN stock by CNCT that was announced today. Sales such as this are often the opportunity for the confident investor to acquire good stock cheap. (Tax selling is another example). Sales at lockup release are harder to judge, mainly because you don't know whether these are liquidity events or insiders bailing because they think the stock is overpriced. Peter