Warehousing

Written By
Paul Tracy
Updated July 18, 2021

What is Warehousing?

Warehousing is the process of accumulating shares in a company for the purpose of eventually acquiring the firm.

How Does Warehousing Work?

Let's say the John Doe Hedge Fund is thinking about acquiring a controlling interest in Company XYZ next year. Rather than make a big tender offer for the shares right now, it simply starts buying a few thousand shares here and a few thousand shares there over the next 12 months. In other words, it begins warehousing the shares.

Why Does Warehousing Matter?

Warehousing accomplishes several things. First, it allows a potential acquirer to take advantage of short-term dips in the target's share price (in other words, it buys shares when they're "on sale"). Second, it avoids having to buy big blocks of shares in one fell swoop, which can make the stock price spike and reveal the company's real intentions. Accordingly, warehousing allows a company to fly "under the radar" for a time. However, the SEC does require anyone who exceeds a 5% ownership threshold to file a form 13G or 13D, which means the size of the company's position will eventually become public and trackable by others.

Activate your free account to unlock our most valuable savings and money-making tips
  • 100% FREE
  • Exclusive money-making tips before we post them to the live site
  • Weekly insights and analysis from our financial experts
  • Free Report - 25 Ways to Save Hundreds on Your Monthly Expenses
  • Free Report - Eliminate Credit Card Debt with these 10 Simple Tricks
Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Warehousing.
Be the first to ask a question

If you have a question about Warehousing, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

If you have a question about Warehousing, then please ask Paul.

Ask a question Read more from Paul
Paul Tracy - profile
Ask an Expert about Warehousing

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms