Shifting strategies and shifting roles

I suspect that it were the small and not the big institutional investors that were responsible for the retreat of the Dow Jones Industrial Average (DJIA) and the S&P 500 from their record levels in last Friday’s Wall Street trading.

This action by small investors of bailing out ahead of the big institutional investors—rather than the other way around as it used to be—also seems to be what is going on in the local market.

It’s the local retail investors that seemed to have been keeping the market down in recent weeks, because of their action to protect against market risks along with the strategy to further assess government pronouncements on the extent of damage inflicted by Supertyphoon Yolanda.

Fresh from their memories of being left holding the bag in the sudden market pullbacks, retail investors are now more cautious. Not just that, retail investors have resorted to the strategy of trading on small percentage plays also.

In this connection, seasoned investors observe that there will definitely be more exciting stock plays in store for anyone in the coming days.

Bottom-line spin

Institutional investors are typically considered the stronger hands while retail investors are generally presumed to be the weaker hands in the balance of market players.

At the moment, institutional investors are not just the stronger hands but are as well the more bullish party under current market conditions.  They are, however, taking a different tack to be ahead of the game.

Instead of following the lead of weaker hands in the market’s downward spiral, institutional investors have been making their stock picks and are quietly starting to accumulate them over the past week or so.

If you will go through the reports on block and cross-sale transactions, the following index stocks stand out: GT Capital Holdings, Inc. (GTCAP), SM Investments Corp. (SM), Manila Electric Company (MER), Megaworld Corp. (MEG), JG Summit Holdings Inc. (JGS) and Universal Robina Corp. (URC).  There are many more of them, if one just digs deeper.

This action of institutional investors and other strong hands may also explain why the market has been active with value turnover transactions remaining undiminished while it seems to have been retreating in the past several weeks.

We may see more of this strategy to go on in the coming days.

Giant killer

After winning his case in favor of client Philcomsat Holdings Inc. (PHC) “against the Bank of the Philippine Islands (BPI) in RTC-Makati Branch 62,” represented by what he called a “giant” in the legal field, my friend, lawyer Dennis Manzanal, presented me with another surprise.

He bested the same “giant” in their “Round Two” in another case by PHC against Rizal Commercial Banking Corp. (RCBC) that stemmed from the controversy as to which PHC board was legitimate.

Along with related cases representing PHC all the way to the Supreme Court, he has effectively cleared the path of the present board of the company, namely the Enrile-Bildner group, as the party that has legal authority over the company.

(The writer is a licensed stockbroker of Eagle Equities, Inc..  You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com