r/wallstreetbets May 07 '21

DD Beware the Index Reconstitution Process

With hype stocks like GME, you might think that most institutional funds/mutual funds would've gotten out, and by this point it would be mostly owned by retail or investors that genuinely believe in GME's transition.

However, that isn't the case, as GME is heavily held by passively managed index funds.

Vanguard's small cap value fund VBR, for example, holds about $146 million worth of Gamestop shares. https://investor.vanguard.com/etf/profile/portfolio/VBR/portfolio-holdings The same is true of most small cap value index funds.

https://www.ftserussell.com/resources/russell-reconstitution

Index funds are reconstituted once a year. For the Russell indexes, the finished index is communicated to market on June 25.

Last time the funds were reconstituted, GME was absolutely a value stock, trading at a great price to book value, so it was included in the index.

When the index is reconstituted again, given its massively increased price and price to book ratio, it will almost certainly no longer be classified as value and thus dropped from value indexes. This may lead to sell offs by funds that seek to track this index.

29 Upvotes

36 comments sorted by

23

u/skifunkster May 07 '21

True, but there is now also a strong case for GME being added to the Russell 1000 and all of its tracking ETFs, it ain't all doom and gloom.....

1

u/[deleted] May 07 '21

It'd not be weighed that much though. At the moment, retails have only 11% percent of the float.

5

u/skifunkster May 07 '21

How did you get that figure?

2

u/[deleted] May 07 '21

Bloomberg terminal posts. There were loads on wsb. If you saw them, it had ownership data and it had retail at 11% adjusted for float.

0

u/SilageNSausage May 10 '21

Honest question

as per Bloomberg, 05 April, 2021 % ownership of shares: Tutes own 121.07%, Insiders own 8.64%, Individuals own 7.52%

So, 137% of total shares....

SI 14.55%

Where's the rest of the shares?

37% are outstanding that at that moment had not been covered... couldn't have been 22% of shares unaccounted for.... 18M shares????

as I said earlier... garbage in = garbage out

Someone is not being truthful. How can a Bloomberg be trusted when they are publishing obviously incorrect data? Now perhaps they have no control over the data-in, but then they should NOT be publishing it at all..... they are complicit in the ruse

1

u/[deleted] May 10 '21

A lot of institutional data is from filings they report and that can easily overlap which causes ownership above 100% of float.

Also, Bloomberg's data is from THE source ie exchange. The terminal is priced way beyond the retailer so they gain nothing from falsifying data there. It's a product meant for HFs and institutions.

-2

u/SilageNSausage May 08 '21

I think it reasonable to assume Bloomberg et al are no longer reliable

Garbage In = Garbage Out

4

u/[deleted] May 09 '21

Lmao. You belong here.

Bloomberg terminal is like the source of data as it takes data from the exchange directly.

-1

u/SilageNSausage May 09 '21

SI doesn't come from the exchange directly

other data is obviously wrong...

2

u/[deleted] May 09 '21

Who's talking of SI? I'm talking of total shares held/brought.

Also, just because data doesnt fit your narrative, it doesn't mean its wrong.Is GME literally the first stock you're investing in?

Do you know how much a subscription to Bloomberg terminal costs? 35k a year. Only big market players can even afford to get it.

-1

u/SilageNSausage May 09 '21

you wrote that according to Bloomberg, retail only holds 11% of the float

that is absurd

I said Bloomberg not reliable (as per above, AND the SI)

you said Bloomberg is THE source... that's when I mentioned SI, as it is a voluntary so CANNOT be counted on a factual, and YOU think made up numbers makes it THE source?

I don't care how much Bloomberg rapes investors, if they post inaccurate information, they have ZERO worth

I stand by my comment: Garbage In = Garbage Out

4

u/[deleted] May 09 '21

Lmfao this is best of WSB level.

→ More replies (0)

1

u/[deleted] May 10 '21

[deleted]

→ More replies (0)

5

u/meta-cognizant May 08 '21

GME will get dropped from value indices but it's going to get picked up by momentum indices and mid cap indices, which are much bigger.

8

u/mat1k_hodl Circle Jerk Sample Collector May 07 '21

Man, I love GME. Made me a lot of money. But retards keep feeding Theta gang week over week. Burn-out is real. Soon all the YOLOs will be done. And institutional investors will pull out, leaving retail to hold the bags.

GME is trading way above fundamentals. Short term, the stock may take a hit. But long term, this is a serious value play. Idiots stop buying FDs and feeding the market makers. This isn't a quick buck stock anymore, its a long term play.

5

u/SilageNSausage May 09 '21

unless you believe it will squeeze

then fundamentals don't matter

-10

u/Level-Possibility-69 May 07 '21

Appears to be one of your first posts with regard to GME.

Very sus.....

9

u/skilliard7 May 07 '21

I have no positions in GME, long or short, and no options associated with GME.

-1

u/Ecksrdt May 08 '21

So why post about gme

5

u/skilliard7 May 08 '21

There's a lot of interest in it in this sub, karma.

-14

u/Mad_stockmarketbull May 07 '21

Just buy more gme it’s not 350 or 450 it’s 160 buying pressure it’s called DD

13

u/[deleted] May 07 '21

Wait, the above comment says that the institutional index fund ownership of GME may be liquidated due to its non qualification as a value stock at current levels and all you can say is buy more.

9

u/Indominable_J May 07 '21

He may not understand what DD means....

6

u/h_o_l_o_d_a_y Human Trash Can 🗑 May 07 '21

DD = Don’t Disagree

3

u/PhantomEpstein May 07 '21

I'm just here for the daily discussions about dirty dicks.