Buying stock with large capital?

Question

Say, for example, I have two million dollars to invest and I buy two million dollars worth of shares of a company. If this company is small and I now own around 5% of the company, will my purchase of two million shares most likely increase the price of the stock?

Answer 1

If you bought it all at once it probably would. Movement like that would be investigated and, as you acquired 5% of the outstanding shares, you'd be in deep doo doo if you didn't file your intention to do so with the SEC. Once you filed, the broker handling the transaction would insure the market wasn't moved by buying the shares on the open market over time.

Answer 2

It really depends on how big a float of stock trades every day.
I would think that if you bought 5% of the stock, you would drive up the price for a while, but If you tried to then sell all that stock at the high price, you wouldn't get rid of much before the stock plummeted in price.

Also, huge trades might get the attention of the securities commission, especialy if you became an "insider" of the company (owning 10% or More).

Answer 3

It is possible.

The 'Street' would want to know who the new player is in town & waht does he know that we don't know. The price could perk up a bit as minor players see the large purchase and jump in.

The street after poking around may find that there is no 'interesting' reason motivating your purchase so the price starts to return to normal.

You can't profit to much from the uptick in stock price by selling all of your holdings because you would be seen as taking profits or dumping.

Answer 4

Only the moment you buy it. For you to buy the stock there actually have to be people willing to sell it.

Answer 5

Yes.

Answer 6

It could.