Someone should probably go to jail for this.
Adams Golf was said to be exploring strategic alternatives to boost shareholder value. I said then that I would value at anywhere from $10-15 in a buyout.
That’s starting to look like a real possibility, given this action in the last month with a 10% pop on Friday:
Short story: this company never trades much more than 15,000 shares on any given day. A typical Friday would close with fewer than 10,000 shares traded. Last Friday, nearly 75,000 shares were traded. A majority of volume came late in the trading day. It was fun to watch, really.
Complaining for No Reason?
I shouldn’t be complaining. This company is going to provide me a very good return should a buyout be announced this week. I’ll be living it up like a champ, having invested heavily into it, and using it for my stock market selections this year as well as last year. (Bring on the bragging rights!)
But this annoys me to no end. Someone knew what was going on – someone knows at what price this company will sell. And someone – or several people – used that inside information to make a quick buck.
I never had plans to add any more to my position. I add funds to my portfolio irregularly, usually in large chunks that appear every few months. I can’t say that I would have piled a ton of cash to it on Friday if the insiders had not made a big move. It’s not like I lose directly from their games.
But what I can say is this is the kind of nonsense that makes people hate finance. This is the kind of garbage that allows people to use “Wall Street” in the same category as the dirt bags on “K street.” It is actions such as these that gives finance a bad rap; the kind of stuff that makes it all too easy to hate investment bankers, portfolio managers, and corporate insiders at otherwise perfectly legitimate companies.
Insider information and distrust of Wall Street is likely partly to blame for a lack of participation from my generation. Forbes reports that 40% of Generation-Yers agree with the statement “I’ll never feel comfortable investing in the stock market.”
This kind of stuff drives me up the wall. There’s so much money to be made legitimately in the financial markets, without insider knowledge and an edge on the rest of the marketplace.
Wall Street needs a swift kick in the balls. Decisions like these, especially the decision to trade on insider information, gives the populists a reason to regulate almost every process from buying stock to wild derivatives.