🗞️The Wrap: Closing Bell
We follow the money and see how CEO pay may affect a company’s stock, dig deep into some data on weed stocks and see how traders behave through out the day.
A trader’s day closely resembles your work pattern when you were in Uni; a whole heap of work in week 1 followed an intense grind in the final week with not much in between. Similarly, trading volumes are concentrated around opening and closing bells.
The NYSE has revealed that 23% of equity trading volume happens in the last 30 minutes before the market closes, up from 18% in 2010. It’s not because people like you and me are up at 5:30am and putting orders through though. It’s the quants; index trackers are trading shares to rebalance their books while HFTs come in to exploit any profit opportunities.
With increased volume comes price movements. UBS (UBS) and Societe Generale are developing products that allow institutional investors to hop aboard this late flurry of volume (and profit) by issuing swaps, certs, and notes. We love it; democratising a complex, inaccessible part of the market.
The average pay of S&P500 is now 278 times that of the average employee according to research by the AFL-CIO. This figure is up from 30–1 in 1978. It is fair that execs are rewarded for their efforts, but have they been performing? In short, there’s no real correlation.
The highest paid is David Zaslav of Discovery (DISCK). He took home US$129.4m last year while generating a 10.5% return. That beat the market by 4%.
So who earned the highest returns? Copart (CPRT) added 82.2% last financial year. Their CEO only earned US$203k. Let’s hope he had an employee stock plan.
Of course, share return isn’t a great measure of company performance- it does not directly correlate to profits, employee welfare and is influenced by macro-factors a CEO can’t control.
Check out all the above data and more here.
Data Deep Dive
We’ve been working with The Green Fund this year to find trends in marijuana stocks. The Green Fund is a blog focused on the cannabis industry, After being the hottest sector in early 2019, some stocks are starting to bounce back after a cool off. We love little tidbits and factoids and here are some from June we uncovered while working with TGF:
- 3% of all trades on Stake are in cannabis stocks; less than 0.5% of stocks are cannabis related.
- While Aurora (ACB) had the most trades, AbbVie (ABBV) had the best buy to sell ratio. There were almost 8 times more buys than sells. The standard is about a 2–1 buy to sell ratio. What does this mean? People are buying and holding the US$100billion bio-pharma giant.
- The biggest individual buy was in Canopy Growth (CGC), with a sum well into the 5 figures flowing into the stock. It was sold 7 minutes later for a quick gain.
- Tilray (TLRY) was the only weed stock with more sells than buys in June. Traders took advantage of the 33% rally to offload some long term holdings.
- Our top 5 biggest weed stock traders by volume are all female.
A train passes two bridges of length 800 m and 400 m in 100 seconds and 60 seconds respectively. The length of the train is?large white cube is painted red, and then cut into 27 identical smaller cubes. These smaller cubes are shuffled randomly.
A blindfolded person reassembles the small cubes into a large one. What is the probability that the outside of this large cube is completely red?
Best Buy | Nio (NIO) +16.7%
I got a text last week asking what I thought of $NIO. A former rocket post IPO, the stock was down 79% since IPO. “Surely it turns around!!”. I told him he was nuts and the stock rocketed up 15%. What do I know?
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