Old Chang Kee surge:Information asymmetry

July 4, 2013 at 4:03 pm 2 comments

Old Chang Kee shares was surging before the news of possible takeover came out today.Obviously, insiders have known the news beforehand and bid up the price although they may not have known the price of takeover. This is a typical case of information asymmetry that we,the outside passive minority shareholder face in the stock market. Unless the company does a good job safeguarding its confidential news, we just have to live with it that we know less, thus a margin of safety must be adhered to.

Entry filed under: Watch your step. Tags: .

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2 Comments Add your own

  • 1. sgxstockpickersgx stockpicker  |  July 5, 2013 at 6:49 am

    But that is how the game works and most likely, no one can trace the source of the leak.

    OCK IPO’ed in 2008 at 20 cents and is now about 85 cents. Not a bad return. However, I always felt bad eating OCK products and I also think that the moment they listed, the price of food and size have gone the “maximising shareholder returns” way….

    Reply
    • 2. leechongmeng  |  July 5, 2013 at 1:55 pm

      thanks for visiting my site.
      yes, i agree it is rare to find retail food chains that can still maintain the standard and price before they ipo, that’s why many family owned business refuse to go ipo for fear of succumbing to this ” institutional imperative”

      Reply

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