Thanks to a reader for alerting me on this action Friday - the shell known as bankrupt Lehman Brothers (LEHMQ.PK) which now trades on the pink sheets rallied a solid 200% Friday. And why not - fundamentals no longer matter; even having a functioning business is just an afterthought.
As long as you have a shell that one high frequency trading firm can trade with another (or if you are real clever, I assume the same HFT firm can work in the dark pools and trade among themselves to create demand - not that this would ever happen because its illegal) - and lo and behold you can attrack other HAL9000s and the retail trader in.
What is inside that shell is really a moot point. The key is generation volume and earning rebates for each trade since you are adding liquidity - the cheaper the better (more shares = more rebates). Boo yah. Via Reuters:
- Itâ€™s either a sign of sheer boredom on Wall Street, or an early celebration of the one-year anniversary of Lehman Brothersâ€™ demise, but shares of the fallen investment bank were red hot today. The stock rose some 200%. Take that AIG.
- For some inexplicable reason, shares of the bankrupt investment bank, which trade on the loosely regulated over-the-counter Pink Sheets, changed hands some 73 million times on Friday. Thatâ€™s a lot of trading in a stock thatâ€™s been worthless for nearly 12 months. Indeed, on a typical day, the average trading volume in Lehman shares is about 2.6 million.
- Then again, todayâ€™s trading surge boosted Lehmanâ€™s closing stock price to 15 cents. It had been sitting around 5 cents for months. Better yet, Lehman now has a respectable market cap of $103 millionâ€“not too shabby for a small-cap company on the Pink Sheets.
- Of course, this trading in Lehman is just crazy. Thereâ€™s not good explanation for it. Just as there is no good explanation for the big surge in shares of American International Group.
After watching Lehman I have decided to take the website public, under symbol FMMF - I believe I too deserve a market capitalization of $100M. I have 1 employee named Mark. I'd tell you some more of the fundamentals - but really it's a moot point. I just need a few HFT firms to take notice and start trading FMMF shares so we can draw in some retail daytraders and then it all self reinforces from there - we can all win here. I also have a llama farm I'd like to take public - symbol: LLAMA. I have another firm I want to take public, it does nothing in particular but I figure should be worth $50M since by doing nothing it is not losing money - symbol: FARCE.
The US stock market ... now akin to a scratch off ticket at your local liquor store.