Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Question about Penny Stocks
Old 09-07-2015, 05:17 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 12,880
Question about Penny Stocks

In my current book, a character reads the mind of someone, and gets information about a company that is about to be acquired.

It's a penny stock, and in this case it's value is 1 cent.

The mind reader knows that the stock price will jump dramatically the next day.

I'd like to have him purchase $10,000 worth of the stock, but I'm guessing that's not possible (too many shares). Is that correct?

How many shares could he likely purchase?

I'm basing the the jump in stock price on this story:

Gateway Industries is a success story spawned by a black swan event. Gateway Industries "provides database management services and Website design and maintenance for national not-for profit, healthcare and publishing entities." The company traded for 1 cent a share and was not known to be an extraordinary firm, even within the penny stock market. The company had one employee, its CEO, Jack Howard, and did not seem to be particularly special.

However, on Feb. 11, 2011 it was announced that Robert F.X. Sillerman would be acquiring Gateway Industries. The announcement was completely unexpected. Robert F.X. Sillerman, a world famous media entrepreneur, needed a company such as Gateway Industries in order to fulfill his vision of facilitating interaction between television viewers and shows. The effect was instantaneous: Gateway Industries' stock immediately jumped over 20,000% to $2.97 a share, a move based on Sillerman's reputation alone.
__________________
Al
TromboneAl is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-07-2015, 05:39 PM   #2
Thinks s/he gets paid by the post
Free To Canoe's Avatar
 
Join Date: May 2008
Location: Cooksburg,PA
Posts: 1,873
Al,


How are you?


Not too many shares. Only a million. I have done the same in real life. Have to go to special brokers (at least in the past) or the fees are in the $100s of dollars per.


Mark
__________________
Free to canoe
Free To Canoe is offline   Reply With Quote
Old 09-07-2015, 08:42 PM   #3
Thinks s/he gets paid by the post
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
I'm sure your character could find a penny stock with a million shares available.
Here's one http://finance.yahoo.com/q?s=REDG


Sent from my iPad using Early Retirement Forum
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
GravitySucks is offline   Reply With Quote
Old 09-07-2015, 11:24 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2012
Location: Seattle
Posts: 6,009
Plenty of penny stocks where you can buy 100,000 or 200,000 shares at a pop.

I bought 100,000 shares of a mining stock that was $0.12 and sold when it rebounded to $0.22 (now it is $0.55 )
Fermion is online now   Reply With Quote
Old 09-08-2015, 07:34 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 12,880
Perfect, thanks!

Here's another question: The guy buys a million shares, and then the next day the company is acquired and the stock jumps.

Is the SEC going to start an investigation, since it would look so much like insider trading?
__________________
Al
TromboneAl is offline   Reply With Quote
Old 09-08-2015, 07:52 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2012
Location: Seattle
Posts: 6,009
Quote:
Originally Posted by TromboneAl View Post
Perfect, thanks!

Here's another question: The guy buys a million shares, and then the next day the company is acquired and the stock jumps.

Is the SEC going to start an investigation, since it would look so much like insider trading?
If he is not a member of Congress, he could be in trouble.
Fermion is online now   Reply With Quote
Old 09-08-2015, 08:16 AM   #7
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 329
Quote:
Originally Posted by TromboneAl View Post
Perfect, thanks!

Here's another question: The guy buys a million shares, and then the next day the company is acquired and the stock jumps.

Is the SEC going to start an investigation, since it would look so much like insider trading?
Sometimes facts are stranger than fiction. NCSS was a stock trading at a low of around 5 cents back in 2000-2001. An investor buys a total of 814,700 shares priced between 12-50 cents. Investor accidently gets a draft copy of merger documents because his name was the same as someone else on the board of NCS. The merger resulted in the shares being worth about $5.25/sh. Here is the link to the SEC filing: http://www.sec.gov/Archives/edgar/da...5606asc13d.txt
FIREd_2015 is offline   Reply With Quote
Old 09-08-2015, 08:30 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
Send a message via Skype™ to kcowan
I think any SEC liability would depend on the traders previous trading activity and how much of the float this $10k represented. I know there are people who can act as surrogates for a small fee.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Penny Stocks popowich Active Investing, Market Strategies & Alternative Assets 10 09-03-2008 09:25 AM
Learning on the fly with penny stocks? Keyboard Ninja Active Investing, Market Strategies & Alternative Assets 23 06-08-2008 06:15 PM
How Do I Buy Penny Stocks?? eddieb FIRE and Money 24 12-12-2007 09:27 PM
penny otc.ob stocks? rawg Active Investing, Market Strategies & Alternative Assets 12 08-13-2007 01:14 AM

» Quick Links

 
All times are GMT -6. The time now is 08:48 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.