IC29 Sep 2024 08:55
A small extract from the feature section of IC this week.
For many small-caps, there is a trade-off between institutional support and liquidity. When Mo Khan was made chief executive of hVIVO (HVO) three years ago, it had a shareholder base that was “80-90 per cent” retail. This meant the shares were liquid but volatile and would have made raising a substantial sum of money “impossible”. He set about increasing coverage of the company by analysts and courting institutions. It took about 18 months for him to convince the first, but others followed and institutions now make up 30 per cent of its shareholder base.
“If I go out now to talk to new investors, the first thing they do is look at the shareholder register and see the likes of Octopus, Canaccord and JPMorgan. They think 'OK, this company is fairly credible'.”
The downside is that the more institutions he has on board, the less liquid the shares become.
“People lose interest because they can’t get the number of shares they want to buy,” Khan says.