Came across this tidbit at the NLS fishfood website
Basic Fish Nutrition
Another common mistake by some hobbyists is to pre-soak their pellets, in the misguided belief that this will aid in digestion and prevent swelling of the pellets inside the fishes gut. This is nothing more than an urban myth created by those that simply do not understand the amount of enzymes and gastric acids that are released by most fish when they consume food. Those hard pellets turn into soft mush in a very short period of time! If a pellet food causes gastrointestinal issues in a fish, it will usually be due to the use of poorly digestible ingredients, such as excessive amounts of grains and grain by-products, not from the food swelling up inside the fish's stomach. Most importantly, when you pre-soak pellet food, you are allowing nutrients and water-soluble vitamins and minerals to leach out into the water.