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Significant demand in a large cap stock mostly comes from large institutional investors. Large institutional investors are finite, and those investors must limi
by aneth4 14y ago
Significant demand in a large cap stock mostly comes from large institutional investors. Large institutional investors are finite, and those investors must limit how much any stock represents in their portfolio. Regardless of what your textbooks say, it is true situation.
- rednukleus 14y agoIt only takes a few hedge funds and a couple of Goldman Sachs to balance out any of those effects. I'm sorry, but you clearly have no idea what you are talking about.
- aneth4 14y agoBecause hedge funds will bid up a stock that no one else is allowed to buy? I thought they like to make money. Markets are often undervalued due to restrictions on buyers. The bull case for the stock is that AAPL will make itself the buyer of last resort, as I expect them to do this earnings announcement. Knowing that the stock is undervalued and that any price increase due to their purchases will be maintained by the market, they can confidently buy the stock back. Dividends can have a similar effect to a buyback, and also expose the stock to dividend focused funds. Large cap companies often must resort to these tactics to increase the number of available buyers when their stock is widely owned.