Thursday, May 14, 2015

"Algorithmic trading has really made the markets unsafe for comedy."

"Shares never quite traded at the offer price, but they did get as high as $8.00 before everyone started treating the offer as a hoax. (Some of the jaggedness in that chart comes from a trading halt.) I submit to you that some part of that jump is attributable to dumb computers scanning the press release, seeing the offer and buying. Some other part is attributable to dumb people scanning the press release, seeing the offer and buying. And a further part is attributable to smart and/or lucky people and/or computers scanning the press release, seeing the fake offer, and figuring they could buy and sell to a greater fool before the inevitable halt and/or crash.  But no part of it is attributable to reasonable people reading the press release and making an informed decision that PTG's offer is a material event for Avon's stock.

PTG's offer is a transparent hoax. Perhaps it is just an amusing piece of performance art, or someone practicing with the Edgar securities filing system, but my assumption is that it's a money-making hoax. It's a sort of spoofing: Whoever's behind PTG presumably wanted to sell some Avon stock at a higher price than they paid for it, so they announced a massive bid to buy the stock at an absurdly inflated price."

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