Dimensional announces an initial 5% holding in Medusa (10.4 million shares).
DFA Fund management has been adding considerably for its funds over the past months incl June and incl Monday and Tuesday this week to take it to the 5% threshold.
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MML closing price today was 84c.
Volume was 2.3 million which is about 7x usual volume these days of around 300k.
It seems redemption selling by one or more funds today to secure cash to pay out investors by 30/6 is the likely cause of the high volume and take down of the price intra day to 81c before it bounced back in the closing auction where there was a 104k bid at 83c not filled. Redemption selling will not be Medusa specific but across other stocks as well to provide liquidity ahead of the year end.
An ex Fund managers view:
"MML share price has been acting bad over the last couple of weeks. This is pure speculation but this could be due to redemption selling. A significant number of funds have quarterly redemption restrictions (investors are only permitted to come out at certain fixed dates). And many funds require around five weeks' notice of redemptions to allow time for a fund to raise money by selling down a part of the portfolio.
Given MML's low liquidity, even if one institutional investor was having to sell down 100,000 shares a day, that would be enough to whack the stock price. Usually such selling eases off a few days before quarter end, since dealers want to leave a margin of safety in raising the required funds. Of course, there could be some bad news out there, but if MML's stock price starts to firm again at the end of the month with no news, then this would indicate that redemption selling was behind the weakness."
MML Price at posting:
84.0¢ Sentiment: Buy Disclosure: Held
