One of the things I love about the Online Philippine Stock Exchange (PSE) Disclosure System is how listed corporations are compelled to give an explanation to why their stock prices are doing so well (or not so well) during a short period of trading days.
In as much as we want to find answers to these "unusual price movements", the corporation themselves, like you and I and perhaps 98% of the investing public (with the other 2% as the market manipulators), almost always have no clue either. If ever their is anything that they might know of, they probably wont disclose anything to discourage speculation.
Therefore, my job here is to post all the "reply to unusual price movement" by the corporations, their responses, and a follow up post to confirm and validate if the movement was indeed, just unusual, or whether or not there was something else to it.
For my first post, we have Active Alliance, Incorporated (AAI) responding to their stock's unusual price movement on 11-Nov-2011. Their share price increased from Php 6.10 to Php 9.15 in a single day. That is a whopping 50% gain; the maximum gain that a stock could make in a single day with the PSE. What does Active Alliance have to say about the unusual price movement?
As stated by their Corporate Secretary, Christine Base, "...we wish to inform you that we have no knowledge of information that caused the increase AAI's share price" (http://www2.pse.com.ph/html/disclosure/pdf/2011/pdf/dc2011-7966_AAI.pdf).
Simply put, THEY DON'T KNOW either. So let's see if we can make sense out of this non-sense.
One of the things that I do when it comes to unusual price movements is to check out the volume it was trading at. Only 22,900 shares of AAI were traded that day with a total value of Php 197,388.00. It doesn't seem like much but it does makes sense; low volume traded stocks are indeed, more susceptible to dramatic price movements. Hence, I dug even deeper on it's historical trading volume.
Below is a snapshot of the AAI's trading activity within the last month. If pictures could paint a thousand words, then this one may have a story worth speculating on.
Share prices during the month of October traded from Php 4.80 to Php 5.50 with an average volume of 564,000 daily. Then in November, with only two active trading days for the stock before Nov. 11, we have a total of 21,900 shares traded before 22,900 shares were traded to cause a 50% price change on Nov. 11. Interesting.
To succinctly conclude, the price change is definitely unusual. However, as the evidence shows, it doesn't seem like it's unintentional.
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