What are institutional shares

what are institutional shares

Toli Kuznets. I've walked the NYSE floor

Upvoted by Alex Song. Morgan Stanley, Bain Capital, Harvard B…

Congratulations on your LinkedIn IPO, in case I'm right :)

What are you trying to optimize? Selling a large block of shares without moving the market? Doing it in a way where your less-option-endowed coworkers don't find out? Sell it fast on the day your lockup window opens?

If you were an institutional investor, the most optimal strategy for you would be to use a dark pool (on BATS, Pipeline or any other provider, see http://www.aleablog.com/2 009/07/. ) - this is essentially what Quora User is suggesting.

However, since you are an individual, I imagine you'd also want to minimize your hassle. You can try finding some institutional investor (ie hedge fund) who'd take the shares off you but that may not be at the "best price".

If you connect with an institutional investor and have them sell the block

for you, you are likely going to lose whatever you are savin g in trading fees.

So if all you care about is selling fast on the first day, and minimize large market movements, I'd recommend finding some broker that lets you trade at VWAP and just letting the algo sell the stock for you throughout the day.

Keep in mind though, if you are selling with VWAP, and the stock goes up/down a lot throughout the day your individual trades will be consistent with average spread at the time of sale, but each block of shares may be sold at reasonably different prices.

And if a lot of people are flipping their options at lockup expiration, it's likely the stock will dip quite a bit from all the increased supply.

Ideally, all of you would pull your shares together and sell them off-the-market to some HF/dark pool for a reasonable transaction fee before the market opens that day.

Source: www.quora.com

Category: Forex

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