Most institutional investors and pension funds are barred from owning stocks below $5. So if Citigroup’s stock remains below that level, it could trigger a wave of selling that would send the share price even lower.
“That’s the danger of crossing that $5 threshold,” says Owen Malcolm, senior vice president of Sanders Financial Management in Atlanta.
“They’re (Citigroup) already in trouble. It could get worse.”
Money managers don’t necessarily have to sell Citi immediately. But they would have to get out before the end of the quarter if the stock doesn’t recover and may opt to do so now to mitigate potential losses.
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