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A new (and currently legal) form of insider trading?

Friday, May 28th, 2010

This report shows how the big Wall Street banks and large hedge funds exploit their access to more information to front-run unsuspecting investors. The takeaway is that certain exchanges (NYSE and NASDAQ by admission) are selling information about investors without their knowledge. Buyers of this information use it to anticipate trades, i.e. front run. The trading intentions of thousands of investors (which is what the exchanges sell) can be a quite reliable indicator of short-term price direction, which means the buyers of the info are legally engaging in Insider Trading, in my opinion. I highly recommend you read this report and share it with other people. Clearly, financial regulators are caught asleep at the wheel once again. See my post on: What are the regulators doing? to learn how this is possible.

Click here for the THEMIS — Data Theft On Wall Street — 05.11.10

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3 Comments

  1. varadha says:

    Terrific, yet simple analysis. I’ve always been a fan of ROIC as a measure of capital efficiency and believe that no size/growth outperformance can replace the quest for efficiency.

    Sort of like a big gas guzzling v8 that needs ever increasing gallons of fuel to keep its engine running

  2. David says:

    But Angie’s $90 per user acquisition cost is going to go away. That’s what their approach probably is. How would their outlook be if that $90 cost dropped down to a total cost of $3 per user?

  3. David:

    That would be great, but cost per user acquisition is not something that’s very easy for a company to fix. ANGI can slash their marketing budget to the bone, but then they would stop acquiring new members. They would probably lose members in fact, as their membership renewal rate is at ~75% and declining. If they cut marketing expense by ~95% as you seem to be suggesting, ANGI might be able to eke out 1 year of slight profits, but they would start shedding members and losing money very quickly. ANGI’s only hope is to keep its marketing budget high and hope it can reach the scale and brand awareness to be able to sustain its business while scaling back marketing costs enough to turn a profit. The fact that ANGI’s revenue growth is slowing down even as its marketing costs keep increasing makes it very unlikely it will achieve that goal.

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