It’s been a long while since I last posted. It’s been a whirlwind of events for me personally over the past couple of years, but that’s a story for another time.
Suffice it to say I’ve been following these boards every now and again, and it’s been very nice to see several familiar faces still posting. I hope and trust you are well!
I wanted to mention something I came across while reviewing the stocks mentioned on these boards. I was searching for ETFs that might be carrying stocks like AYX, MDB, OKTA, TWLO and others at high concentrations, to potentially purchase a basket of these stocks under one ticker. Well it isn’t hard to find, really. All you have to do is search one of the ETF databases and see which ETFs carry your stock and at what weight in their portfolios. I managed to find a few funds that carried these companies at sufficient enough (>3%) levels, but here’s what surprised me. There weren’t very many of them, and the two that interested me most are both closing.
To put it in more relatable terms, when people like Cramer and others talk about market rotation, etc, well, what that means more specifically is that fund managers are closing the doors of their funds, for their own reasons, and when those portfolios are sold down the shares inside them sell at whatever the market is offering. When they have a lot of shares to sell it’s going to move the markets.
For one of them, BKCH, they said they received a NASDAQ notice telling them they didn’t have enough shares outstanding. Here’s their letter: https://info.advisorshares.com/bkch-press-release-2019-09-16… They say they felt their number 100,000 was enough, but rather than messing with it they made the business decision to liquidate. So, that’s that. The last day you can trade BKCH is tomorrow. By now they’ve already liquidated most of their holdings so they can ready their cash distributions.
Another fund that holds many of the same stocks, FNG, is also closing. They are managed by the same company as BKCH (AdvisorShares). Their listing closes next week.
I could speculate that anyone receiving notice of pending liquidation might just opt to sell their shares in advance. And so that’s that, too. A timetable of when shares must be sold (perhaps easier to do over a timeline) but compounded by daily forced sellings because people exiting in advance. And that’s created a really bad environment for these stocks.
Both of these funds have holdings in AYX, MDB, OKTA, TWLO, and others, in pretty significant amounts. Anyway I just thought I would share what I found to put what happened over the past few weeks in terms of a concrete set of examples. It’s not that any of these companies are bad or not worth what they were just a few weeks ago. It’s just the result of a few business decisions, like them or not. The two bits of good news is the worst of the damage is over, and second there aren’t many funds anyway who have these stocks in high concentration. Kudos and who needs 'em.