Thinking ahead to the food shop, it’s easy to forget the little things that make Christmas dinner special. The many ‘must-have’ accoutrements to go with the turkey include cranberry sauce, sliced gherkins, pickled onions and for some reason the mint jelly that my niece loves (but can’t really explain why). They’re usually left over in the cupboard from last year so rather than overshop I just tear off the ‘use-by’ labels.
Talking of pickles, the market got itself into one on November 7th when Rightmove (the on-line real estate company) published a trading update. Investors rushed to the table to trade €386M in the shares - 10x more than the €39M recent median value (see today’s chart). This propelled Rightmove to the 4th most traded stock in the UK just ahead of BAT, and 26th in Europe. The shares fell 38% on the previous close before making their way back to -13% in just one day, and with ongoing elevated volumes taking it to a new fair value over the following weeks.
Such a move sends the sprouts flying, with margin calls triggered, shorts covering, hedges adjusted, and buyers avoiding a falling carving knife (sorry). The markets can be fickle.
Naturally, this popped up on our radar as a good candidate for the 12 Days of Trading. Diving into the roasties, we noticed that a very high proportion traded in the dark (37%) and €86M of that went through the CBOE dark pool block matching service (“LIS”). Because this venue imposes high minimum sizes, trades here hint at substantial interaction between institutional shareholders.
A little more investigation showed that the market reacted to the company’s AI acceleration strategy to help meet their ambitious long term growth targets. With all the nervousness about a potential AI bubble out there, here is a real estate sector event that maybe reflects that market sentiment.
It’s a great reminder that markets process new information through trading activity that drives price to its new fair value. In this case, some very large dark-pool blocks indicate new investors entering at a lower price, before the narrative settles. Just as we saw with Pirelli’s Convertible Bond in Day 1 of this year’s 12 Days of Trading, the biggest clues often lie in the flows. It’s tempting to say it’s gravy to the markets.
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