Forum Moderators: goodroi
4.7 million shares become eligible for sale Thursday.
By February, a total of 270 million shares will be eligible for sale.
The press seems to make the lockup expiration out as a bad thing. I think it's good. With such a small float currently, there aren't enough shares for institutions to pick up a significant number of shares. Once some of the locked up shares are sold, institutional buys will have a much easier time getting shares. It could be turbulent during the process, but I think GOOG will emerge much stronger afterwards.
I don't see any way the expiration will drive up prices, as I don't think more shares available will increase institutional demand. How much prices drop as more shares come on the market is a matter for speculation.
I think the institutional demand is out there, and will continue to grow. Different funds have different criteria for stock selection, and GOOG will be picked up by many of them (NASDAQ 100, large cap funds, tech funds, growth funds, etc.) over the next few years.
Also, many of the original holders bought for a quick flip. Once they sell to longer term investors, there will be much less downward pressure.
Last week, I said...
I think the institutional demand is out there, and will continue to grow. Different funds have different criteria for stock selection, and GOOG will be picked up by many of them (NASDAQ 100, large cap funds, tech funds, growth funds, etc.) over the next few years.
And here comes the first big one...
FMR holds 5.2 million shares (15.5%) of GOOG [yahoo.reuters.com]
FMR is Fidelity. With a half a billion dollar investment, they are obviously confident in GOOG.
Expect even more major institutional buying in the weeks and months to come.
I appreciate that you believe your prediction to be accurate, but FMR holding a sizable portion of Google doesn't make it so.
Time will tell.
Martin points out that more than a dozen firms will be initiating coverage on Google next week, following the end of the quiet period for IPO underwriters.
The underwriters weren't allowed to publish research for 40 days. Only those who weren't involved have been putting out research so far, which of course has been negative. In about a week, we'll see a bunch of positive research. In the meantime, smart money will be positioning to take advantage of spike that the positive research will likely produce.
Mark Mahaney of American Technology Research says several factors are contributing to Google's recent price rise. One, he says, is that Google is being added to stock indexes.
Just as I said. GOOG will be an important part of many funds.
Value shop Legg Mason (LM:NYSE - news - research) said Tuesday it owns almost 13% of Google's (GOOG:Nasdaq - news - research) Class A stock. ... The largest slice of Legg Mason's Google stake is held by its Value Trust fund. That fund, led by value manager Bill Miller, owns 2 million shares, amounting to a 6% stake in Google's Class A stock.
I think it's somewhat comical that their "Value" fund (as opposed to a "Growth" fund) is buying so much GOOG, but it just continues to show my point.
With such a small float, mutual funds cause huge movement in stocks when they buy. These funds are buying anyway. Apparently, they think the risk of missing out is more than the risk of moving the price.
I still think that even more mutual funds will buy once the float increases.
Near Term Volatility Seen For Google [forbes.com]
"We believe much of the current uncertainty will be relieved after the Nov. 18 expiration and expect the stock to be among the strongest performers through year-end."
I tend to agree. With an average daily volume of over 10 million shares, these extra shares are just a drop in the bucket. The November, December, and January lockup expirations will make virtually no difference. The February expiration (176 million shares) might, but if anything, I expect it to stabilize the stock.
I'm seriously considering getting back into GOOG soon, probably with a much larger position than before.
