Understanding how floating stocks work "A comp
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Posted On: 10/06/2022 3:02:22 AM
Understanding how floating stocks work
"A company's float is an important number for investors because it indicates how many shares are actually available to be bought and sold by the general investing public," says Tim Speiss, co-partner in charge of the Personal Wealth Advisors Practice with EisnerAmper LLP. "Low -loat stocks typically have higher [bid-ask] spreads and higher volatility than a comparable larger float stock."
Quick tip: A bid-ask spread is the difference between how much someone will buy a security for (bid price) and how much someone else is willing to sell it for at any particular time (ask price). The smaller the bid-ask spread, the better. High-float stocks tend to have a narrow bid-ask spread, while low-float stocks often have a much wider gap.
What are low-float stocks?
While there's no industry-wide standard for what defines low-float stocks, Speiss says, many brokers consider stocks with fewer than 10 million freely available shares for trading to be a low float.
For example, Nortech Systems Incorporated currently trades on the New York Stock Exchange with 2.66 million outstanding shares. Of that, 1.16 million shares are floating. Only about 44% of this stock is available for public trading. The majority of this stock is owned by either major investors, employees, or company insiders, making it a low float.
Smaller floats like this are subject to large swings in value from news impacting a company's finances, the popularity of products, and other changes that can influence demand. According to Nasdaq, Sequential Brands' low float stock experienced a 104.57% increase in price between July 1 and 6, 2021, in spite of reports bankruptcy may be around the corner for the company. Trade volume spiked from nearly 34,000 shares on July 1 to around 13 million on July 6. Just two days later, the stock price dropped 27% and trading volume slowed to 728,000 shares.
This kind of volatility can present opportunities to buy and sell shares to quickly make money, but it isn't generally compatible with long-term investment strategies. Because the value of low-float stocks can be so unpredictable, there can be considerable risk attached to investing in them. Also, low-float stocks are in short supply, which can make it difficult to buy or sell them. The bid-ask spread may be much higher than you would find with a high-float stock as a result.
As mentioned before, companies may decide to increase their float by issuing new shares as a way to raise capital or encourage more trading. But they may also choose to reduce their float through a stock buyback, which can result in increasing the value of shares. This usually happens if the company believes its shares have been discounted too much, wants to invest in itself, or wants to see its financial ratios go up.
"A stock buyback is a way for a company to reinvest in itself," Speiss explains. "The repurchased shares are absorbed by the company and the number of outstanding shares in the market is reduced. Because there are fewer shares on the market post buyback, the relative ownership stake of each investor increases."
Quick tip: If you're interested in investing in low-float stocks, it's important to keep a very close eye on how it performs. Stock prices and volumes can rise and fall drastically several times within a single day. To make sure you're buying and selling at the right time, you need to constantly monitor the market.
Shares outstanding
Shares outstanding are the total shares of stock a company has. It includes the restricted and closely held shares, as well as the ones available for trade, whereas float refers only to the number of shares available for trading.
It's important to look at and understand how much the total stock is so you can calculate whether the float is high, low, or in the middle. You can find outstanding shares and float statistics on most investing websites and indexes. Subtract the float from the outstanding shares to find how many shares are not available for trading. That will help you better evaluate what kind of float a stock has and whether investing in it might fit into your overall strategy.
Every investor in Regencell Bioscience Holdings Limited (NASDAQ:RGC) should be aware of the most powerful shareholder groups. With 81% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And looking at our data, we can see that insiders have bought shares recently. This could signal that stock prices could go up and insiders are here for it.
Yat-Gai Au founded Regencell Bioscience so that more people can benefit from natural and holistic treatments with a goal to provide everyone equal access to such treatment for many years to come.
Throughout the last few years, several people have largely contributed to the overall success of RGC. James Chung (Chief Operating Officer) and Dr. Chao (Chief Medical Officer), who joined Regencell in 2015 and 2019, respectively, were inspired by their personal experience with TCM and the major improvements they saw on ADHD and ASD patients.
"For our company to remain true to what we believe in, and continue to head in the right direction, it's critical to have the right set of people with a shared value of interests. Our team develops programs and leads scientific trials to ensure our services and products are effective, safe and useful," shares Yat-Gai.
The company has grown to be more than just a research and development facility for the treatment of neurocognitive disorders and degenerations. "It's paving the way for extraordinary improvements in TCM to be mainstream. Why should only a small group of people or communities have access to these groundbreaking treatments?"
In a recent clinical study - EARTH Trial - results showed that RGC-COV19TM is an effective formula for the alleviation and elimination of COVID-19 symptoms within 6 days. This in return helps to reduce the risks of hospitalizations and death. The rigorous trials have shown the effectiveness of TCM and alternative medicine in a hyper-modern and tech-driven world.
Although the clinical studies completed by RGC will still need to be peer-reviewed in the coming months, there's been growing interest from the market as the company has built quite a reputation for its research and development (R&D) in the field of alternative medicine.
"We are a company that looks to make a difference where it's possible, and while our R&D may be limited to a few fields of interest, over time we'll be able to broaden our perspectives to more complex treatments," Yat-Gai briefly mentions.
Through its IPO, Regencell had net proceeds of $22.7. million, investments that helped grow the company's access to the tools and resources needed to fast-track clinical studies.
Since the company went public, Yat-Gai has noticed that short and distort organizations or individuals are starting to affect their stock price and sentiment. "Companies like ours are not given the opportunity to prove themselves since the culprits are driving down the value of smaller companies, causing the market and general public to lose its confidence. This causes damage to our company, particularly the patients, some who are desperate for a solution," he said.
To help mitigate the negative effects of such short-term schemes, Yat-Gai managed to purchase more than $5.9 million worth of ordinary company shares. To date, Yat-Gai Au is the majority shareholder, with an 81% stake in the company. This leaves around 19% of shares owned by other shareholders.
"To date, I have spent millions of my personal finances on purchasing RGC shares. My most recent purchase was worth $886,000 of RGC shares at an average price of US$39.48, increasing my shareholdings by 0.2%. I believe in the company and its future and intend to continue to put my money where my mouth is and increase my shareholdings."
Seeing as majority ownership is held within the company, oftentimes referred to as 'Insider Ownership,' it allows them to have better control over critical decision-making issues that can help fast-track the company's overall development goals.
"The decision to repeatedly purchase RGC shares over the last several months is to support and ensure the potential of the company can be met for years to come. We've vested a lot of time, energy, and resources in Regencell, and we're well aware of the potential difference it can make in the field of alternative medicine. I believe that as I lead the way our company will be able to meet the goals we've set out to achieve within the coming years."
The long-term transactions not only give the company better control over critical decision-making but enables them to boost investor sentiment.
https://www.businessinsider.com/personal-finance/stock-float
https://pro.benzinga.com/blog/how-to-find-low-float-stocks/
https://finance.yahoo.com/news/81-regencell-b...17095.html
https://www.ibtimes.com/regencell-ceo-shares-...ed-3600337
"A company's float is an important number for investors because it indicates how many shares are actually available to be bought and sold by the general investing public," says Tim Speiss, co-partner in charge of the Personal Wealth Advisors Practice with EisnerAmper LLP. "Low -loat stocks typically have higher [bid-ask] spreads and higher volatility than a comparable larger float stock."
Quick tip: A bid-ask spread is the difference between how much someone will buy a security for (bid price) and how much someone else is willing to sell it for at any particular time (ask price). The smaller the bid-ask spread, the better. High-float stocks tend to have a narrow bid-ask spread, while low-float stocks often have a much wider gap.
What are low-float stocks?
While there's no industry-wide standard for what defines low-float stocks, Speiss says, many brokers consider stocks with fewer than 10 million freely available shares for trading to be a low float.
For example, Nortech Systems Incorporated currently trades on the New York Stock Exchange with 2.66 million outstanding shares. Of that, 1.16 million shares are floating. Only about 44% of this stock is available for public trading. The majority of this stock is owned by either major investors, employees, or company insiders, making it a low float.
Smaller floats like this are subject to large swings in value from news impacting a company's finances, the popularity of products, and other changes that can influence demand. According to Nasdaq, Sequential Brands' low float stock experienced a 104.57% increase in price between July 1 and 6, 2021, in spite of reports bankruptcy may be around the corner for the company. Trade volume spiked from nearly 34,000 shares on July 1 to around 13 million on July 6. Just two days later, the stock price dropped 27% and trading volume slowed to 728,000 shares.
This kind of volatility can present opportunities to buy and sell shares to quickly make money, but it isn't generally compatible with long-term investment strategies. Because the value of low-float stocks can be so unpredictable, there can be considerable risk attached to investing in them. Also, low-float stocks are in short supply, which can make it difficult to buy or sell them. The bid-ask spread may be much higher than you would find with a high-float stock as a result.
As mentioned before, companies may decide to increase their float by issuing new shares as a way to raise capital or encourage more trading. But they may also choose to reduce their float through a stock buyback, which can result in increasing the value of shares. This usually happens if the company believes its shares have been discounted too much, wants to invest in itself, or wants to see its financial ratios go up.
"A stock buyback is a way for a company to reinvest in itself," Speiss explains. "The repurchased shares are absorbed by the company and the number of outstanding shares in the market is reduced. Because there are fewer shares on the market post buyback, the relative ownership stake of each investor increases."
Quick tip: If you're interested in investing in low-float stocks, it's important to keep a very close eye on how it performs. Stock prices and volumes can rise and fall drastically several times within a single day. To make sure you're buying and selling at the right time, you need to constantly monitor the market.
Shares outstanding
Shares outstanding are the total shares of stock a company has. It includes the restricted and closely held shares, as well as the ones available for trade, whereas float refers only to the number of shares available for trading.
It's important to look at and understand how much the total stock is so you can calculate whether the float is high, low, or in the middle. You can find outstanding shares and float statistics on most investing websites and indexes. Subtract the float from the outstanding shares to find how many shares are not available for trading. That will help you better evaluate what kind of float a stock has and whether investing in it might fit into your overall strategy.
Every investor in Regencell Bioscience Holdings Limited (NASDAQ:RGC) should be aware of the most powerful shareholder groups. With 81% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And looking at our data, we can see that insiders have bought shares recently. This could signal that stock prices could go up and insiders are here for it.
Yat-Gai Au founded Regencell Bioscience so that more people can benefit from natural and holistic treatments with a goal to provide everyone equal access to such treatment for many years to come.
Throughout the last few years, several people have largely contributed to the overall success of RGC. James Chung (Chief Operating Officer) and Dr. Chao (Chief Medical Officer), who joined Regencell in 2015 and 2019, respectively, were inspired by their personal experience with TCM and the major improvements they saw on ADHD and ASD patients.
"For our company to remain true to what we believe in, and continue to head in the right direction, it's critical to have the right set of people with a shared value of interests. Our team develops programs and leads scientific trials to ensure our services and products are effective, safe and useful," shares Yat-Gai.
The company has grown to be more than just a research and development facility for the treatment of neurocognitive disorders and degenerations. "It's paving the way for extraordinary improvements in TCM to be mainstream. Why should only a small group of people or communities have access to these groundbreaking treatments?"
In a recent clinical study - EARTH Trial - results showed that RGC-COV19TM is an effective formula for the alleviation and elimination of COVID-19 symptoms within 6 days. This in return helps to reduce the risks of hospitalizations and death. The rigorous trials have shown the effectiveness of TCM and alternative medicine in a hyper-modern and tech-driven world.
Although the clinical studies completed by RGC will still need to be peer-reviewed in the coming months, there's been growing interest from the market as the company has built quite a reputation for its research and development (R&D) in the field of alternative medicine.
"We are a company that looks to make a difference where it's possible, and while our R&D may be limited to a few fields of interest, over time we'll be able to broaden our perspectives to more complex treatments," Yat-Gai briefly mentions.
Through its IPO, Regencell had net proceeds of $22.7. million, investments that helped grow the company's access to the tools and resources needed to fast-track clinical studies.
Since the company went public, Yat-Gai has noticed that short and distort organizations or individuals are starting to affect their stock price and sentiment. "Companies like ours are not given the opportunity to prove themselves since the culprits are driving down the value of smaller companies, causing the market and general public to lose its confidence. This causes damage to our company, particularly the patients, some who are desperate for a solution," he said.
To help mitigate the negative effects of such short-term schemes, Yat-Gai managed to purchase more than $5.9 million worth of ordinary company shares. To date, Yat-Gai Au is the majority shareholder, with an 81% stake in the company. This leaves around 19% of shares owned by other shareholders.
"To date, I have spent millions of my personal finances on purchasing RGC shares. My most recent purchase was worth $886,000 of RGC shares at an average price of US$39.48, increasing my shareholdings by 0.2%. I believe in the company and its future and intend to continue to put my money where my mouth is and increase my shareholdings."
Seeing as majority ownership is held within the company, oftentimes referred to as 'Insider Ownership,' it allows them to have better control over critical decision-making issues that can help fast-track the company's overall development goals.
"The decision to repeatedly purchase RGC shares over the last several months is to support and ensure the potential of the company can be met for years to come. We've vested a lot of time, energy, and resources in Regencell, and we're well aware of the potential difference it can make in the field of alternative medicine. I believe that as I lead the way our company will be able to meet the goals we've set out to achieve within the coming years."
The long-term transactions not only give the company better control over critical decision-making but enables them to boost investor sentiment.
https://www.businessinsider.com/personal-finance/stock-float
https://pro.benzinga.com/blog/how-to-find-low-float-stocks/
https://finance.yahoo.com/news/81-regencell-b...17095.html
https://www.ibtimes.com/regencell-ceo-shares-...ed-3600337
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