Retail Investors: Who Wins and How Do Institutional and HFT Flows Affect Them?

Post date: 2023-07-03 12:54:47 GMT

Analyzing the Performance of Highly Traded Retail Stocks from June 01-30, 2023

According to AbleMarkets analysis, from June 01, 2023, to June 30, 2023, retail investors were strongly represented buying Calithera Biosciences, Inc. (CALA), iPath Series B Bloomberg Tin Subindex Total Return ETN(JJT) and Rubius Therapeutics, Inc. (RUBY). The respective retail buy flows were 86.29% of total buy volume for CALA (corresponding retail sell flows of 53.03% of total sell volume), 84.26% for JJT (retail sell flows of 45.70%) and 87.76% for RUBY (retail sell flows of 64.67%). The opposite side of the trades in CALA was picked up by institutions (49.29% of sell volume) and HFTs (23.82% of sell volume). For JJT, institutions traded opposite retail in 50.00% of sell volume, while HFTs traded 30.41% of sell volume. For RUBY, institutions moved 54.84% of sell volume, while HFTs traded 4.02% of sell volume. Note that the flows may add up to more than 100% since flows may overlap at the execution desks. For example, both institutional and retail trades may be executed with HFT strategies.

On the retail sell side, Pacer CSOP FTSE China A50 ETF(AFTY), Coinbase Global, Inc. (COIN) and WisdomTree U.S. Corporate Bond Fund(WFIG) were very popular. In AFTY, retail traders sold 73.61% of total sell volume for AFTY (corresponding retail buy flows of 68.01% of total buy volume), 71.65% for COIN (retail buy flows of 24.26%) and 71.82% for WFIG (retail buy flows of 66.57%). The opposite side of the trades was taken by institutions (30.78% of total buy volume) and HFTs (19.15%) for AFTY. In COIN, institutions picked up 92.86% of total buy volume and the HFTs traded another 26.69%. Finally, in WFIG, institutions took 37.02% of the trades opposite to retail sells, and HFTs picked up another 17.25% of total buy volume.

Who wins? Do institutional and HFT flows affect retail investors? In the six "most retail" stocks profiled here from June 01, 2023, to June 30, 2023, the "retail buy" stocks CALA, JJT and RUBY posted returns of -1.13%, +0.78%, and -14.69%, respectively. The "retail sell" stocks AFTY, COIN and WFIG, on the other hand, posted returns of -1.83%, +13.94%, and -0.67%, respectively.

On the volatility front, the top "retail buy" stocks had return variation of 1.60%, 0.16%, and 5.32%. The top "retail sell" stocks had return variation of 1.27%, 5.29%, and 0.37%.