What's considered a low float on the ASX?

[ctur0001]

Hi everyone,
Been doing some research into low floats, and what is considered a low float, but all the answers i have found have been related to the NYSE, The ASX seems to average a way higher float than stocks in the NYSE.

So the question is from experience, what is considered a float in the ASX that is volatile or "low" ?

- Cheers.

 

[So_Cynical]

A low volatility float? im not sure what you mean..

 

[ctur0001]

A low volatility float? im not sure what you mean..

"Floating stock is calculated by subtracting closely-held shares and restricted stock from a firm’s total outstanding shares. Closely-held shares are those owned by insiders, major shareholders and employees, while restricted stock refers to insider shares that cannot be traded because of a temporary restriction such as the lock-up period after an initial public offering. A stock with a small float will generally be more volatile than a stock with a large float, apart from having limited liquidity and wider bid-ask spread. Because of these issues, institutional investors seldom invest in low-float stocks. Also known as share float or simply “float”.

Read more: Floating Stock https://www.investopedia.com/terms/f/floating-stock.asp#ixzz57mrlawaV "

 

[pixel]

I don't think the ASX differentiates between "low" and ordinary floats - or IPOs as they're called here. Every time a company offers a tranche of shares, a prospectus must be published. In that prospectus, interested investors can find everything necessary:
whether it's an existing company being recapitalised or it it's a new IPO;
how many shares are offered and at what issue price;
whether any options go with it;
how many shares the vendor/s keep themselves;
any escrows and other restrictions;
intended use of the capital raised;
etc.
However, I've never heard of different labels being used. An IPO is an IPO is an IPO...

 

[ctur0001]

I don't think the ASX differentiates between "low" and ordinary floats - or IPOs as they're called here. Every time a company offers a tranche of shares, a prospectus must be published. In that prospectus, interested investors can find everything necessary:
whether it's an existing company being recapitalised or it it's a new IPO;
how many shares are offered and at what issue price;
whether any options go with it;
how many shares the vendor/s keep themselves;
any escrows and other restrictions;
intended use of the capital raised;
etc.
However, I've never heard of different labels being used. An IPO is an IPO is an IPO...

You misunderstand what i mean by low float, Read my above paragraph to understand. In the US i know a low float is considered between 1-50mil floating shares. But in ASX companies average a higher float from what i analysed. So i was wondering what people deemed for "low" to be. Guess not many people identify the float in the aussie markets.

 

[systematic]

You talk about float in terms of number of shares. I only think of it in percentage terms.

 

[ctur0001]

You talk about float in terms of number of shares. I only think of it in percentage terms.

That's a better way to look at it. What do you view as a "low" float in percentage terms.

 

[systematic]

Below ~40% when looking at small or ‘all’ stocks. That number goes up quite a way when looking at only those with a reasonable market cap. Which you’d expect, if you think about it. Larger market cap means many more millions of dollars available, so you’d expect floats to be bigger.
A low float would be less than ~55% in a universe equivalent to something like ASX300 or the All Ords. Which is right around the average for small / micro stocks. So the question of ‘low’ depends on the cap range. Average for the larger universe of stocks is ~ 75%.

If I was looking for low float companies for some reason I’d start with ~50-60% cut-off unless looking at micro caps where I’d want a cut-off ~35-40%. That’ll put you in the vicinity of the bottom quartile, or thereabouts.

Are you looking at this as a proxy for low liquidity, or as a flag for potential highly invested ownership - or something else?

 

[ctur0001]

Below ~40% when looking at small or ‘all’ stocks. That number goes up quite a way when looking at only those with a reasonable market cap. Which you’d expect, if you think about it. Larger market cap means many more millions of dollars available, so you’d expect floats to be bigger.
A low float would be less than ~55% in a universe equivalent to something like ASX300 or the All Ords. Which is right around the average for small / micro stocks. So the question of ‘low’ depends on the cap range. Average for the larger universe of stocks is ~ 75%.

If I was looking for low float companies for some reason I’d start with ~50-60% cut-off unless looking at micro caps where I’d want a cut-off ~35-40%. That’ll put you in the vicinity of the bottom quartile, or thereabouts.

Are you looking at this as a proxy for low liquidity, or as a flag for potential highly invested ownership - or something else?

Cheers for the great response, im looking at the float of a company in the likely hood for its volatility for day trading. Would be a great tool to utilise as excess demand on a low float stock would produce highly volatile results, which is ideal for trading.

However the low liquidity may cause issues, probably ideal to find a balance between liquidity and volatility in the float. Just my 2c

 

[systematic]

Cheers for the great response, im looking at the float of a company in the likely hood for its volatility for day trading. Would be a great tool to utilise as excess demand on a low float stock would produce highly volatile results, which is ideal for trading.

However the low liquidity may cause issues, probably ideal to find a balance between liquidity and volatility in the float. Just my 2c

Day trading is out of my zone, but if you're only looking at highly liquid (say, ASX200) you want to amend those figures or you won't be looking at many stocks. Here, a low (bottom quartile) float would be anything less than ~75%! Looking below 50% will give you only around 10 companies. But again, that's what you'd expect from such a large and liquid group of stocks.

 

[peter2]

If you're considering day trading ASX stocks I don't think knowing the float is helpful. You want volume, liquidity and volatility. You'll find all three at news announcements.

You're not trading stocks, you're trading people.

edit: Classic example.

 

[samuilk]

If you want to day trade, stick to the american markets thats what i do.