Unilife has been admitted to the Russell 3000 index. This is a list of companies used by investment funds in the USA to determine where they will place their funds. The Russell indexes seek to list the best companies in the world they are not ranked one to three thousand but there is also a Russell 2000 index which Unilife is not on.
THE METHODOLOGY OF THE RUSELL INDEXES
Russell produces a family of market cap-weighted U.S. equity indexes. All U.S. indexes are subsets of the Russell 3000E™ Index, which represents approximately 99% of the U.S. equity market.
This is a summary of how these indexes are constructed. We also offer an in-depth description of the index methodology (PDF).
Purpose
• Act as a performance standard for active managers.
• Serve as a proxy for asset allocation purposes.
• Become a purchasable and replicable vehicle for passive investment strategy.
Determining index membership
• Rank the U.S. common stocks from largest to smallest market capitalization at each annual reconstitution period (May 31).
• Top 3,000 stocks become the Russell 3000 ® Index.
• Largest 1,000 stocks become the Russell 1000 ® Index.
• Next 2,000 stocks become the Russell 2000 ® Index.
• The smallest 1,000 in the Russell 2000 Index plus the next smallest 1,000 comprises the Russell Micro cap Index.
Determining style index membership
• Rank each stock in the Russell 1000 and Russell 2000 by two variables: the book-to-price ratio and the I/B/E/S forecast long-term growth mean.
• Combine variables to create a composite value score (CVS) for each stock.
• Rank the stocks by their CVS and apply a non-linear probability algorithm to the distribution to determine style membership weights. Roughly 70% are classified as all value or all growth and 30% are weighted proportionately to both value & growth.
Exclusions
• Stocks trading below $1.00.
• Pink sheet and bulletin board stocks.
• Closed-end mutual funds, limited partnerships, royalty trusts, etc.
• Foreign Stocks and American Depositary Receipts (ADRs).
Adjustments
• Adjust shares outstanding for cross ownership and privately held shares to reflect shares available for trading.
• Adjust book value due to FAS 106 & 109 write-offs when determining price-to-book ratio for style classification.
Maintenance
• Stocks deleted between reconstitution dates are not replaced.
• Spin-offs and Initial Public Offerings are the only additions between reconstitution dates.
• Dividends are reinvested on the ex-date.
http://www.russell.com/indexes/membership/methodology/russell_us_indexes_methodology.asp
MARKET MAKERS
You probably take for granted that you can buy or sell a stock at a moment's notice. Place an order with your broker, and within seconds, it is executed. Have you ever stopped to wonder how this is possible? Whenever an investment is bought or sold, there must be someone on the other end of the transaction.
If you wanted to buy 1,000 shares of Disney, you must find a willing seller, and visa versa. It's very unlikely you are always going to find someone who is interested in buying or selling the exact number of shares of the same company at the exact same time. This begs the question, how is it that you can buy or sell anytime? This is where a market maker comes in.
A market maker is a bank or brokerage company that stands ready every second of the trading day with a firm ask and bid price. This is good for you, because when you place an order to sell your thousand shares of Disney, the market maker will actually purchase the stock from you, even if he doesn't have a seller lined up. In doing so, they are literally "making a market" for the stock.
How do Market Makers make their Money?
Market Makers must be compensated for the risk they take; what if he buys your shares in IBM then IBM's stock price begins to fall before a willing buyer has purchased the shares? To prevent this, the market maker maintains a spread on each stock he covers. Using our previous example, the market maker may purchase your shares of IBM from you for $100 each (the ask price) and then offer to sell them to a buyer at $100.05 (bid). The difference between the ask and bid price is only $.05, but by trading millions of shares a day, he's managed to pocket a significant chunk of change to offset his risk.
http://beginnersinvest.about.com/od/beginnerscorner/l/blmarketmakers.htm
Unilife was admitted to the Russell 3000 on the 25 June as a result there was a significant increase in trades of Unilife on the NASDAQ that day Alan Shortall CEO of Unilife made the following comment on the 28 June
Most companies that joined the Russell 3000 and associated indexes, including Unilife Corporation, experienced a significant increase in the trading volume of their common stock on U.S. exchanges on Friday, June 25. There were almost seven million Unilife shares traded on Friday, which is the equivalent of 41.7 million CDIs with a value of approximately US$50 million. We expect much of the increase in Unilife trading volume on Friday represented the inflow of U.S. investors that track the Russell indexes." said Mr. Shortall.
As this would of represented a significant proportion of the shares available for the NASDAQ and as it is unlikely that such a high proportion of shareholders would of sold I for one expected that the difference between the shares sold on the NASDAQ and those available to be made up from the purchase of CDIs on the ASX n and transferring them To the NASDAQ however the amount of shares transferred from the ASX to the NASDAQ in the following days fell well short of the expected difference .
I would speculate therefore that the market Makers acted in a way similar to this
1. Held a small amount of shares
2. Churned the shares causing the 7 million trades The NASDAQ only records one million 1 hundred thousand as being accumulated in total on trades that day
3. Purchased a small amount of CDIS after the day to fill any gaps
This theory doesn’t quite make sense as their would still be a deficit but it’s the best I can come up with