The hurdles of liquidity

Larger funds interested in investing in biotech face a conundrum: How to sell positions in thinly traded stocks. Excluding top tier stocks, average daily volume for publicly held biotech companies in the first quarter was 153,500 shares.

A $10 million investment, although large by biotech standards, is not out of the ordinary for investors like Janus or Fidelity. Some momentum players also have been making sizable investments. According to a capital analysis by The Carson Group, which looked at the top 15 aggressive growth funds that were new to the sector, the average investment in the first quarter was $5.2 million. ...