Submitted by simonbart on November 9, 2007 - 6:29pm
Hypothetical question.
If I found out that my company was going to get bought out.....how could I benifit from that information.
What is the gurantee that the stock price would go up???
Submitted by ucodegen on November 9, 2007 - 6:40pm.
If this information has not been released to the general public, you can do jack shit. Any action done on stock trades under this condition is illegal.
Submitted by nostradamus on November 9, 2007 - 7:09pm.
Hi Simonbart,
I'm glad that's just a hypothetical question and you're not really considering it while posting on a public blog with the topic "insider information". The fact that you would leave such a clear trail means you couldn't possibly be considering acting on this info!
That being said, the effect on a stock (I'm assuming it's a publicly traded company) depends on the terms of the buyout, who's buying it, and much more.
Submitted by sandiego on November 9, 2007 - 10:02pm.
I don't know your financial status but I can't imagine that your purchase of a few thousand shares would catch anyone's attention.
Also, the stock won't go up more than a few percent.
Lets say it is trading at $25 per share. The buyout offer MIGHT be for 10-20% above the market (in order to intice enough people to tender their shares). It won't double or triple. A profit of $4 per share on 2000 shares isn't going to let you retire.
On the other hand, Martha Stewart went to jail for lying to the grand jury about trying to save a $49,000 loss (after acting on insider information).
Submitted by Fearful on November 9, 2007 - 11:45pm.
The SEC investigates unusual activity in a stock. Its investigation diligence is independent of the sizes of transactions. So if there is unusual activity, and the SEC investigates, you could get in trouble for trading a single share. To be safe, you would have to route trades through an unrelated party - which would involve you transferring cash to that party, which would then be detected by the IRS, assuming you routed significant amounts of cash. And, as "sandiego" pointed out, if you do not do this with significant amounts of cash, it will not return enough to be worthwhile.
Submitted by simonbart on November 10, 2007 - 2:18am.
There is just a lot of water-cooler talk at my job about a potential buy out coming down the pipeline.
Is it really insider information???
I'm sure the big analyists are already prepared for this type of thing.....and know how to profit from such a transaction. I'm just not sure how the normal joe blow can make a few bucks.
The SEC investigates unusual activity in a stock. Its investigation diligence is independent of the sizes of transactions. So if there is unusual activity, and the SEC investigates, you could get in trouble for trading a single share. To be safe, you would have to route trades through an unrelated party - which would involve you transferring cash to that party, which would then be detected by the IRS, assuming you routed significant amounts of cash. And, as "sandiego" pointed out, if you do not do this with significant amounts of cash, it will not return enough to be worthwhile
Yup. Think Dow Jones and the joker that attempted to inside trade there. You'd be surprised the reach of the SEC. This is particularly why I don't play stocks in the retail sector. One of my siblings does market research for I-banks and covers retail sector, does recommendations for hedge funds/ private equities etc.. I don't step within 1 foot with any companies she covers or plans to cover.
The way I look at it. It's a catch 22. For you to profit a lot from this, you would have to buy lots of shares. You most likely will get flagged for that. If you buy little shares, it won't make much of a difference. And frankly, if your company gets bought by an exorbitant price, your current stock options/stock the company gave you should be more than enough compensation. You did negotiate these when you joined your company, right? So why dick around with your own money for a couple of thousand extra? It's not worth it.
If you have non-public information about the company that can materially affect the stock price and you trade on that information, that's inside trading.
Anyway, unless you have a lot of money you're going to dump into your company stock, you're not going to make that much on it anyway. So why take a chance?
Side Note: One correction to something I said earlier. I am playing with one retail company, but it's definitely one that my relative isn't covering in her research.
Submitted by LookoutBelow on November 11, 2007 - 9:30am.
Dont worry about it and trade it as you believe....your not going to make enough to even warrant even a glance from the schmoes from the SEC. Their budget has been cut so many time just so they CANT investigate even the BIGGEST crooks in the game, you dont have anything to worry about, besides, I assume youre not a principle in the company....
Most All of the "advice" given here is from people who believe in ghosts and santa claus still.....trade it, make some moola, everyone else can go to hell.
PS I trade heavily and Ive traded on a lot MORE sound info than youve got there and lost....and then again, Ive done very well on rumors also. Its war in the market, play accordingly.
If this information has not been released to the general public, you can do jack shit. Any action done on stock trades under this condition is illegal.
Morality anyone?
That would be called inside trading.
Hi Simonbart,
I'm glad that's just a hypothetical question and you're not really considering it while posting on a public blog with the topic "insider information". The fact that you would leave such a clear trail means you couldn't possibly be considering acting on this info!
That being said, the effect on a stock (I'm assuming it's a publicly traded company) depends on the terms of the buyout, who's buying it, and much more.
Oh and morals are great, yay morals.
Pin the Tail on the troll....
I don't know your financial status but I can't imagine that your purchase of a few thousand shares would catch anyone's attention.
Also, the stock won't go up more than a few percent.
Lets say it is trading at $25 per share. The buyout offer MIGHT be for 10-20% above the market (in order to intice enough people to tender their shares). It won't double or triple. A profit of $4 per share on 2000 shares isn't going to let you retire.
On the other hand, Martha Stewart went to jail for lying to the grand jury about trying to save a $49,000 loss (after acting on insider information).
The SEC investigates unusual activity in a stock. Its investigation diligence is independent of the sizes of transactions. So if there is unusual activity, and the SEC investigates, you could get in trouble for trading a single share. To be safe, you would have to route trades through an unrelated party - which would involve you transferring cash to that party, which would then be detected by the IRS, assuming you routed significant amounts of cash. And, as "sandiego" pointed out, if you do not do this with significant amounts of cash, it will not return enough to be worthwhile.
...that is, unless you are Merrill Lynch.
Then it's just company policy.
http://query.nytimes.com/gst/fullpage.ht...
Maybe we should be buying stock in porcine lipstick.
There is just a lot of water-cooler talk at my job about a potential buy out coming down the pipeline.
Is it really insider information???
I'm sure the big analyists are already prepared for this type of thing.....and know how to profit from such a transaction. I'm just not sure how the normal joe blow can make a few bucks.
The SEC investigates unusual activity in a stock. Its investigation diligence is independent of the sizes of transactions. So if there is unusual activity, and the SEC investigates, you could get in trouble for trading a single share. To be safe, you would have to route trades through an unrelated party - which would involve you transferring cash to that party, which would then be detected by the IRS, assuming you routed significant amounts of cash. And, as "sandiego" pointed out, if you do not do this with significant amounts of cash, it will not return enough to be worthwhile
Yup. Think Dow Jones and the joker that attempted to inside trade there. You'd be surprised the reach of the SEC. This is particularly why I don't play stocks in the retail sector. One of my siblings does market research for I-banks and covers retail sector, does recommendations for hedge funds/ private equities etc.. I don't step within 1 foot with any companies she covers or plans to cover.
The way I look at it. It's a catch 22. For you to profit a lot from this, you would have to buy lots of shares. You most likely will get flagged for that. If you buy little shares, it won't make much of a difference. And frankly, if your company gets bought by an exorbitant price, your current stock options/stock the company gave you should be more than enough compensation. You did negotiate these when you joined your company, right? So why dick around with your own money for a couple of thousand extra? It's not worth it.
Go ahead and tell us the company. We are not insiders and we are allowed to trade on rumor and speculation.
Is Warren Buffet buying it?
http://www.builderonline.com/industry-ne...
http://www.suntimes.com/business/628080,...
http://www.topix.com/com/brka/2007/08/bu...
http://www.topix.com/business/financial-...
I don't think I'm should be categorized as an insider either. I'm just one of the peons.
And as far as stock options go.....it's such a measly amount....it might as well be squat.
simonbart,
If you have non-public information about the company that can materially affect the stock price and you trade on that information, that's inside trading.
Anyway, unless you have a lot of money you're going to dump into your company stock, you're not going to make that much on it anyway. So why take a chance?
Side Note: One correction to something I said earlier. I am playing with one retail company, but it's definitely one that my relative isn't covering in her research.
"Go ahead and tell us the company. We are not insiders and we are allowed to trade on rumor and speculation."
Yeah, Simonbart, wer'e having a dinner in your honor. Come on over Martha Stewart will cooking for us all.
Dont worry about it and trade it as you believe....your not going to make enough to even warrant even a glance from the schmoes from the SEC. Their budget has been cut so many time just so they CANT investigate even the BIGGEST crooks in the game, you dont have anything to worry about, besides, I assume youre not a principle in the company....
Most All of the "advice" given here is from people who believe in ghosts and santa claus still.....trade it, make some moola, everyone else can go to hell.
PS I trade heavily and Ive traded on a lot MORE sound info than youve got there and lost....and then again, Ive done very well on rumors also. Its war in the market, play accordingly.
Insider trading my ass