Cheers Jako.
I always think of BD as just another tool in the kit. Much of the time, there's too much noise and not enough of a clear signal for it to be of use. But when backed-up by sound analysis, it can sometimes give some handy clues. And very occasionally, i'll take a position based largely on BD, provided there's sufficient newsflow coming up and no red flags.
A few scenarios:
# Big buying from a 708/insto focussed broker into a nanocap. Can be a sign that smart money is getting set. Ideally, you'd like to see minimal selling from other brokers and a mix of selling across various parties (ComSec, ANZ, Westpac, NAB, CMC etc).
# Strong buying from a lead manager to a placement in the aftermarket. Always good to see a LM supporting any loose stock after a placement is done.
# LM selling after a placement. In this case, BD can help you estimate how long it might be until the overhang is nearly finished. Helps with timing an entry. The extension of this is watching when a LM starts taking profits as it can indicate a sign of a distribution zone for the LM and their clients. Just means more resistance to work through if you're long.
Need to get to learn who clears through who. So, for example, Jason Peterson often clears through PSL, so if he's just gone SH in a company and you start to see a heap of PSL selling, chances are...
Pershing has a number of corporate clients, so you'll find boutique broker buying/selling is often reflected via Pershing when these brokers are LM to a placement/IPO. Look up the broker's FSG to see who they clear through.
Need to add the caveat that nothing above is set in stone but all just general tips that help paint the picture and support what should already be solid analysis (FA, TA - whatever your strategy). Also won't be of much use to daytraders, due to T+2 for the BD.
Good examples of large broker soaks I can remember, followed by runs would be Baillieu taking a big stake in 4DS in the high 1s/low 2s for months. Also UBS taking a big stake in BOE in the 2s over a 6 month period, followed by a nice move. SWJ is currently quite interesting in that UBS have once again been buying big for a while on what appears a fairly uninspiring stock.
Other good trade examples of BD supporting sound FA have been RVR APC ALK.
Any Qs, happy to try and answer.
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