Posts Tagged ‘stocks’

Gregory D. Saxton and Ashley E. Anker on Financial Bloggers

Thursday, July 31st, 2014

Seal of SUNY BuffaloGregory D. Saxton and Ashley E. Anker of SUNY Buffalo have recently posted to SSRN their paper The Aggregate Effects of Decentralized Knowledge Production: Financial Bloggers and Information Asymmetries in the Stock Market. The paper was published in the Journal of Communication, vol. 63, no. 6, pp. 1054-1069.

Here is the abstract:

New media have markedly enhanced individuals’ capacity to produce and disseminate original knowledge; however, the literature has not extensively examined the broad effects of such decentralized production processes. The current study thus focuses on a unique context — the stock market — in which it is possible to test the aggregate impact of blog-based information production. Using data on 150 top financial bloggers and stock returns from the S&P 500, this study supports the hypothesis that financial blogging activity diminishes harmful information asymmetries between key market investors. This study thus adds to the “media effects” literature, highlights the societal relevance of bloggers, and shows how economic concepts and financial market settings can be employed for powerfully testing communication theories.

Shareholder Lawsuits Quickly Follow Facebook’s IPO

Thursday, May 24th, 2012

Nasdaq chart of Facebook stock
Facebook’s falling stock. (Image: Nasdaq)

Facebook and its investment bankers are being sued over an IPO that didn’t “pop” the way so many investors were hoping. After debuting at an issue price of $38, Facebook’s stock has fallen to a low of $30.94. As I write this, it’s trading at a little over $32.

On Friday, I did a post about the law of IPOs. I talked about how much paperwork you have to file with the SEC in order to do a public offering, including a long, boring document called an S-1. So tedious, almost no one will read it. Almost. As I said:

You know who reads S-1s? Other lawyers. In particular, litigators. Lawyers who are looking for some misstatement or some unmentioned fact that will serve as a basis for a lawsuit based on federal securities law. And then it’s off to the courthouse!

Ahem. That didn’t take long. According an Associated Press story published yesterday:

One suit, filed in U.S. District Court in New York, claims Facebook’s IPO documents contained untrue statements and omitted important facts, such as a “severe reduction in revenue growth” that Facebook was experiencing at the time of the offering.

AnnaMaria Andriotis at SmartMoney adds an interesting footnote to this whole story about a trend of declining payouts in securities class-actions. That means the Facebook lawsuits may be just as disappointing to investors as the IPO.

DEER Shoots Back: Stock-Pick Blogger in Crosshairs of Blender Maker

Tuesday, March 29th, 2011

DEER's Meat Grinder MG-4118. Who'd want to short that? (Photo: DEER)

A publicly traded manufacturer of small kitchen appliances, DEER Consumer Products, has distributed a press release announcing that it is suing stock-picker blogger Alfred Little of the blog Seeking Alpha.

I haven’t seen the complaint, but the press release says the suit in New York state court is “related to … false ‘research reports’ about DEER, which appear to be part of an orchestrated scheme to manipulate and depress DEER’s stock.”

DEER makes blenders, ice shavers, juicers, and things like that. They are traded on the Nasdaq (symbol: DEER).

It looks like an example of the kind of thing that provoked DEER would be this blog post, accusing DEER management of inflating sales numbers and misappropriating $12 million from a supposedly shady land purchase.

I’ve got to say, both sides of this controversy strike me as being a bit off.

A big chunk of DEER’s press release is devoted to explaining how great their attorney is. The press release states, “DEER IS REPRESENTED BY HIGHLY QUALIFIED LITIGATION COUNSEL.” (It’s a former SEC attorney named Robert Knuts.)

Meanwhile Alfred Little, the blogger, recounts how he conducted some kind of investigation by visiting government offices in China, during which he recorded all his conversations. His blog post includes pictures of the buildings he visited and some office wall plaque.

Maybe it’s totally cool with the Chinese government for bloggers to run around government offices taking pictures and recording conversations, but, hmmm, It would give me pause.

Is this par for the course for stock blogging and small publicly traded company press releases? I don’t know. But the whole thing makes me happy I’m not a day trader.