jump to navigation

I reported Insider Trading on LNUX VA Software to U.S. Securities and Exchange Commission February 23, 2006

Posted by deminvest in investment.
trackback

Dear Investor:

Thank you for contacting the SEC.

Tell Us About the Firm or Individual You Have a Complaint Against

Name VA Software Corporation


Tell Us About Your Investment

Type of Security stock

Tell Us About Your ComplaintApplication for Award of a Bounty concerning suspicion of Insider Trading on LNUX stock of VA Software Corporation.

The LNUX stock rose 60% in the week before earning report.

This steep strong rise is very suspicious for several reasons:

1) No news about the company and was on the press that lead to think the 2Q results would be so amazing.

2) The stock price had been steady under 2$ a share for 6 months, and suddenly grew up to 60$ with extremely high volumes in the week before earning announcements.

The Fremont software company LNUX reported net income for the second quarter of $10.5 million, or 17 cents per share, compared to a net loss of $702,000, or a penny a share, in last year’s second quarter.
Net revenue grew 57 percent to $14.7 million, compared to last year’s $9.4 million.

They reported extremely those good results Tuesday February 21 after market closed, but the stock had already enjoyed a 60% price hike because somebody probably knew trough insiders about those amazing good results.

I did sell 340 stocks on Tuesday at 2,89 $ when market was still open, because I did not know the results would be so outstanding. As a result of those extremely good results, the stock arrived to 3,88$ the day following the Q2 outstanding report.

Comments»

1. Wolf - March 1, 2006

If you would have done your homework on this stock you would have known they were going to report a great quarter. I knew and I’m no insider.

Made some very nice profits the last few months also.

2. deminvest - March 1, 2006

The price was flat under $2 in October, November, December, January, and February… till a week before earning reports. Then it skyrocketed up 60 % in 2 days!

That is the difference between GUESSING and KNOWING my dear friend.

If you GUESS you are not willing to pay today 60% more than you were yesterday. If you KNOW today you can pay that much more, because yesterday you did not know and now you do. You also know for sure you will be able to sell higher after results are published and everybody else knows too.

Do you get the difference between guessing and knowing?

By the way, congrats for guessing right in the past 🙂

3. ramses - March 2, 2006

You mentionned you invested a week prior to earnings, anticipating that the earnings would be good. Yet, you are not an insider. Although I am not arguing that there was no insider trading, I am not convinced by your argument, especially since you bought it yourself. If you anticipated the earnings, then why would many others not do so as well?
In your latest reply, you mention that “If you guess you are not willing to pay today 60% more than you were yesterday.” This argument is also weak as there is no percentage were all investors suddenly take their profits. You must realize that other investors have other targets in mind and that in those situations of great anticipation, greed and euphoria take over the stock and it moves without reason or justification.
Your plea seems analogous to a gambler that places a large bet at a roulette table after 5 red, and bets black. The ball stops on black and you come in and claim the game was rigged by the gambler or something similar.

4. deminvest - March 2, 2006

Is there a reason, for a non stupid person, to decide NOT TO BUY LNUX on February 13 for 2$, then decide TO BUY LNUX on February 16 for 2.6$?

Why this weird behaviour if there is no public news between February 13 and 16?

Do those people like to waste money buying more expensive?

We should really buy for those poor investors some good Palm organizers, so they think about a stock 15 days before earning reports and, if they guess the report will good, they can buy it at the right price, without having too pay more than I had to pay!

What led them to think earnings may be not so good till February 13, and then decide they would be great on February 16?

And look at the volumes also.

Really people don’t like to pay the same stock today 60% more than 3 days ago, unless there is some news in between… But there was none…

A stock flat for 6 months does not have a 60% hike in few days without any news! People don’t enjoy paying 60% more just because earning report day is 3 days closer!

Find me just one example of such a hike after months of flat behaviour if you can, in absence of any publicly available news connected to the stock.

I bought February 13, 2006 LNUX under 2$ at about the same price it had for months, basically because I thought it was a bargain stock. I was not guessing about earnings. As I usually do before buying, I posted on my Blog the reasons why I was going to buy:

https://deminvest.wordpress.com/2006/02/13/va-software-corp-lnux-a-bargain-linux-stock-for-the-democratic-investor/

I was lucky that the stock skyrocketed, and so were my few readers. I expected a long term growth, not such a sudden hike.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: