the first question however is to groom it for what?
1. If you want a penny-dreadful trading special, you issue 1 or 2 billion shares at half a cent to all manner of players, then sit back whilst they do their thing...namely pumping the volumes on the back of news to both lift the stock and indeed, create a retail centric environment whereby they can gradually offload their stock.
2. If however you have a decent project, but a less than conducive register, such as may happen if; a/ The register has too many sit and hold investors leading to illiquid or limited trading volumes b/ Poorly understood project. c/ Por or limited market communication from the Company d/ Or just plain lack of interest from both retailers and investors alike for any number of reasons...
All of which lead to low liquidity (daily trading volumes), and a subsequent lack of interest from those who might otherwise invest/trade in the stock.
Nobody wants to buy 100,000 shares in a stock that trades just 5,000 shares per day...as good as it might be, it would take over a month and very possibly kill the share price, just to realise some profits.
Another focus of "grooming" is to create retail and/or fund interest...which for all intents and purposes results in the same thing...increased volumes and typically a far more volatile, albeit it generally rising (at least in the initial phase), stock.
Media and market communication is an important element of grooming a stock.
Another aspect is to canvas the larger shareholders...especially those who may well have been sitting land-locked with a significant number of shares in say an illiquid stock that barely trades any volume each day. It may well be that the first sign these people see of volume they take advantage off it, more or less giving the stock a kick in the head the minute it starts to run. If however such a shareholder is aware that a re-rating scenario is in play...and that at some point in the not too distant future trading volumes may well increase significantly, along with the share price...then they may well decide NOT to sell into any buying that may appear.
Look also to the possibility of shorters in the stock, or any group for that matter that may effectively reside in the stock...in essence, they need to make sure there are no groups who will do everything in their power to hold a stock's price down.
Finally...and this is perhaps the critical issue...make sure you have targeted a Company that has a real project, preferably significantly undervalued, that will support a re-rating scenario and accompanying burst of buying pressure, without the need for it to come crashing back to earth once the volumes subside at any given moment, for what ever reason.
The latter is of critical importance when it comes to "grooming"...if you pick a stock that is already full of "players" (there are hundreds of stocks like this - typically penny dreadfuls), who usually have links in one way or the other with the Companythey will use your buying against you, to burn you and make money from you...and essentially kill off any grooming process by effectively capturing YOU in the stock.
Control of the free float is equally critical...be it by design or organically driven by register demographicsor changes theretothe extent of any rise, the degree of market interest, be it retail or fund, investor or trader, and the increase in trading activity relative to same, all hinges on the profile of the free-float relative to the sector and the story of the stock in question.
Every stock that trades has a free float...it is what controls the trading patterns and daily fluctuation in price.
Control the float and you control the direction of the stock...either way of course.
Cheers!
WTN Price at posting:
66.0¢ Sentiment: Buy Disclosure: Held
