Seasoned Equity Offerings as Technical Market Anomalies: Long-Term Temporal Trading Functionalities

摘要

The main goal of this paper is to approach the Seasoned Equity Offerings (SEO) trading opportunities as technical market anomalies and under the prism of a number of temporal (time-based) long-term trading functionalities (long-term TTF) introduced for the first time in corporate finance literature. The long-term is defined, for the purposes of this paper, as the 3-year time period, traded usually with daily, weekly and monthly time-frames. Trading is a temporal (i.e. time-based) historical living system with a number of functions, like: SEO, IPO, stock (instrument) price action Gaps, Breakouts, etc. In this domain, a number of warning long-term and short-term dynamics timing functionalities is available, like: candlestick patterns breaks, price action patterns pivotal-lines breaks, on open gup-ups (ooGUp), on open gup-downs (ooGDn), morning breakouts (mB), etc. All these time-based functionalities are regarded as 2nd level functions (i.e. functions of functions; because of the timing involved) with great trading opportunities, and they are defined –for the first time in the corporate finance literature- by this paper as temporal (timing) trading functionalities. In particular, the SEOs with the embedded long-term TTF functionalities are great trading opportunities for the institutions, the individual (non-commercial) market investors, the swing traders, and the speculators. Data analysis shows that during the seasoned equity offerings time, shareowners significantly increase their share-holding, including offerings that would be classified as overpriced at that time; hence, the involved trading volatility is increased resulting in great trading and profit opportunities. This paper contributes to corporate finance literature by examining the SEOs functions and define and document their inherit TTF functionalities. For this purpose, four categories of share-holders are regarded: The long-term institution non-commercial traders (investors), the swing momentary institution traders (institutions), the short-term non-commercial traders (speculators) and the intraday non-commercial traders (speculators). Paper concludes that, in SEO/long-term TTF trading, apart from the insiders, the swing traders (usually the smart-money and the institutions) are more benefited, at the expense of momentary short-term and intraday speculators, while the long-term investors are not affected by the SEO offerings.