Words: Harris Darroch, Financial Markets
Welcome to the first in a series of blog posts in which every week we highlight an important Tweet, pushed out by EarlyBird, which has been quick to identify some major market moving news.
We kick off our inaugural Tweet of the Week with this Tweet below:
It was collected by EarlyBird’s AI SmartTracks on Monday morning, to coincide with one of the largest moves in European equity markets of the quarter, and was sent out immediately before trading commenced.
On Monday 10th July, following extended short selling pressure from major institutional players, and a dire trading update, the price of Carillion PLC gapped at the open from 192p to 124p.
Over the course of the week the share price sagged further, ending at approximately 70% down (at just 54p) to the previous week’s close.
Carillion PLC Share Price (Source: AOL Finance)
The move made headlines around the world and left several fund managers with profits running into the tens of millions of pounds.
It also highlights the importance of understanding herd mentality in relation to a single equity, in addition to reported exchange volumes and interests.
For a FTSE 250 company with a revenue stream of approximately £5 billion GBP, such a radical realignment in valuation, while not unprecedented, should be extremely unlikely.
In the case of Carillion PLC however, this move was made possible by an overwhelmingly bearish bias among fund managers that saw about 30% of the available liquidity in Carillion shares on loan for the purposes of short selling.
EarlyBird picked up all the warning signs of major short pressure through its ‘Short Sellers’ and ‘Carillion PLC’ SmartTracks.
Reported volumes and interests to the downside have been widely available through most major news outlets (albeit delayed), but EarlyBird SmartTracks, which lead news aggregators by several minutes and find information they miss, make it possible to understand what the influential voices in the marketplace are saying at any given time.
Instead of displaying manually loaded information like traditional tools, they actively identify, in real time, the most important voices on Twitter for any subject of your choosing. They then bring you the most valuable – and actionable – news, commentary and data for traders, researchers and portfolio managers.