How different shareholder types behave after a capital raise.

InvestorHub has analysed the behaviour of hundreds of thousands of investors to understand the post-placement activity for dozens of issuers and how different investor types (in this case, new versus existing) behaved post-placement. The difference that we found between the cohorts is not what you may expect given the general perception of existing versus new shareholders' behaviour.

We posted a poll last week to see what you thought would be expected in this situation. Specifically, whether it’s existing or new shareholders that are more likely to sell during the post-placement period of a capital raise. 75% of poll participants agreed that it was new shareholders that are more likely to sell down positions and this is reasonable considering many would argue that holding multiple tranches of a stock is indicative of shareholder loyalty.

75% of poll respondents are correct, however, our data suggest that the difference between these shareholder types is much smaller than most would expect.

  1. Both types are equally likely to downgrade (reduce positions).
  2. New shareholders are slightly more likely to sell out completely (35% vs 30%)

‍When it boils down to a single statistic; new shareholders will either downgrade or sell out 51% of the time versus 46% for existing shareholders

Was this the difference you expected, because it certainly seems minor to me; especially when you consider how differently new and existing shareholders are perceived when discussing investor behaviour.

It’s fairly easy to think that post-placement activity can be attributed to a single investor types but as seen above, it doesn’t appear to be quite so simple. If anything, this supports that post-placement strategies around retention and engagement, apply to all investor types.

Want to dig into these stats yourself? InvestorHub offers a post-placement analysis feature for clients to uncover insights into your shareholder behaviour.