Credit Suisse ceases to be a substantial holder announcement today.
Looks like another "elephant" got "spooked and leap out of that pool (or sell the stock), then the water level (price of the stock) will fall rapidly" - see below post I made some time ago on the SYR thread about insto's.
The Australian article dated 11 Oct 2016 above mentioned...."Syrah Resources chairman Jim Askew and his former managing director, Tolga Kumova, apparently copped an absolute roasting at a lunch with a roomful of fund managers at Credit Suisse’s Sydney office yesterday, as the pair tried to unwind some of the damage caused by last week’s ham-fisted and clumsy leadership change." No doubt it was some of these fund managers who attended the lunch who may have sold. Their lunch would have been on the 10 October, perhaps they were "reassured" and have begun to buy again on the lows.
"When the Dependability Becomes Instability
Of course, you can have too much of a good thing. O'Neil is careful to point out that while institutional sponsorship is attractive, a lot of institutional ownership can be a sign of danger. If something goes wrong with a company and all the institutions holding it sell en masse, the stock's valuation can tank - regardless of fundamentals
Think of a stock as a swimming pool. The water level is analogous to the stock price, and elephants represent institutional investors. If the elephants suddenly start stepping into the pool (buy the stock), the water level (the price of the stock) will rise very quickly. However, if the elephants get spooked and leap out of that pool (or sell the stock), then the water level (price of the stock) will fall rapidly.
Remember, institutions are not only investors but also traders. In principle, they will put money into stocks only after lots of fundamental analysis, identifying where the stock price should be and compare that to where it is. In practice, however, they often forego fundamental analysis for the signals emitted by technical indicators. Because their main worry is whether the stock price is going up or down, institutions will often concentrate on whether the price direction has any momentum."
A stock with a lot of institutional support may be close to the peak of its valuation, or full of elephants. When every mutual and pension fund in the land owns a chunk of a particular stock, it may have nowhere to go but down. Look at the meltdown of technology stocks in 2000 and 2001. Companies like Cisco, Intel, Amazon and others had an unprecedented amount of institutional sponsorship, but as the subsequent collapse of their share price demonstrated, they also had unattractive fundamentals.
......................................
"The Bottom Line
Although logic and statistics show that institutional sponsorship is a good indicator of a good company, investors should be aware that institutional investing is not always driven by quality fundamentals. Before you depend on the assumption that smart money is the leader in judging fundamentals, make sure you determine whether the institutions are investing for the same reason you are.
