The Bear Room, page-2140

I was scratching my head over those articles mentioning fund managers who were pumping ZIPs turnaround, thinking how, why? There is nothing to say except that the SP has gone gangbusters from the depths. Then I read this......

Small caps’ wild EOFY ride exposes market’s dirty little secret

Monday’s list of worst performers looked like Friday’s best performers turned upside down. It was laughable.

Most investment managers charge performance fees, usually calculated on outperformance against a benchmark and based on quarterly, half-yearly or annual returns.

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Sav

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So, what So, what happened? Nothing; there were no big moves on Wall Street, no outbreak of war, no OPEC meeting threatening supply cuts, no damning global economic growth numbers and no big move in bond yields or the outlook for interest rates. The world is still largely as it was at 4.10pm on Friday.

The only thing that changed was the calendar; FY24 is gone, and we are one full trading day into FY25.

Relevant? Very. That turn of the month is the most important day of the year for our fund managers.

Most investment managers charge performance fees, usually calculated on outperformance against a benchmark and based on quarterly, half-yearly or annual returns.

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It smacks of window dressing – driving a stock price up heading into a key balance date, June 30, in a bid to pump up that performance or outperformance number and optimise those fees.

How else do you explain that five of the top 10 small ordinaries stocks on Friday were bottom 10 performers on Monday? We know small-cap investors can be punters, but that would be bitcoin-level speculation. And five stocks jumping around like that would require a lot of coincidences.

We ran it past five small-cap fund managers on Monday.

They all agreed it was at least a bit odd. Three said it was a joke; two said the five names were not the sort of widely held institutional stocks that would normally attract nefarious trading or make sense for window dressing.