Mark Twain said, “Get your facts first and then you can distort them as much as you please.”

The 1959 annual review of Mark Twain’s accounts by his successors in Redding, CT, found that his IBM shares, perhaps once units of the International Time-Recording Co. formed in the 19th century, were worth $148,000.

That’s a little-known fact. By wading through fine print for years, we’ve not only passed on nuggets about humorists, but we’ve also found nifty facts proving trading markets have fundamentally altered the IR job.

We found a couple this week that may surprise you. The 2012 SEC budget reveals that the agency collected about $1.3 billion in “Section 31” fees in 2011.

Every trade earns the SEC a fee. Since 1933, the SEC Act (now US Code, Title 15, Sections 77 and 78) has allocated Section 6(b) fees for securities offerings, 13(e) fees on corporate stock repurchases, and 14(g) fees on proxy solicitation to “recover the costs to the government of the securities registration process…”

Don’t get lost in the b’s, e’s and g’s. Stay with me here. Continue reading →

When you were a kid, did you lie on your back on the lawn and look for shapes in the clouds?

Nanex finds Charlie Brown and unicorns in trading data. Or maybe goblins and Jack the Ripper. IR professionals should know about Nanex. In Boston last month, I asked for a show of hands from IR folks who’d heard the name. No one had.

Nanex is the electronic microscope for markets, zooming in on trades and quotes in thousandths and millionths of a second. They find shapes, patterns. What Nanex calls crop circles.

These are footprints of algorithms. On September 15, 2011, at 12.48.54.600 hours Eastern Time, Nanex discovered that in one second of trading in YHOO, encompassing some 19,000 quotes and 3,000 trade-executions, a number of trades matched at quotes that didn’t exist until 190 milliseconds after the trades occurred. Nanex termed this apparent evidence of time-travel in trades “0.19 fantoseconds.”

Sure, laugh it up. When asked what might limit it, Illinois Institute of Technology HFT expert Ben Van Vliet responded: “The speed of light.” Continue reading →

At Winter Park Sunday scooting off the Panoramic high-speed chair at 12,060 feet and cooking downslope on skis, the trip was anything but algorithmic.

No, skimming from summit to the lift slow zone was uniquely and individually exhilarating. But in equity markets, unique exhilaration more often comes from derivative bets that randomly pop stocks 7-8%. Otherwise, your shares blend with millions of other securities across asset classes mixed and matched in proprietary recipes aimed at unique outcomes from ordinariness.

Last week, we likened the movie Moneyball, about baseball statistics, to how stocks trade today. Let’s go one step further. Your story is unique. You differentiate your performance from your peers. We as individuals want to be valued on our own merits. So we hope our company’s shares are examined discretely.

Institutional and retail investors want the same thing, right? Distinct success stories, diamonds in the rough. Listening to advertisements from big mutual funds, you get the sense that analysts are rooting in the rice paddies of southeast Asia to learn why fiber optics from the Philippines are the next big opportunity for a German manufacturer of diodes. Or whatever. Continue reading →

We missed part of the Super Bowl tromping snowshod through a chamber-of-commerce snapshot 3,000 feet above Denver. We’ve tallied 20 inches of grade-A, premium Rockies powder the past five days.

Speaking of grade A, have you seen the movie Moneyball? If not, rent it. For story, cast, script, direction and acting, we don’t think better has been done in years. We were riveted.

“Moneyball” is a term writer Michael Lewis (The Big Short, Liar’s Poker, Blindside) coined to describe the application of statistics to baseball-team construction. Pressed to deliver returns economically, Billy Beane, manager of the Oakland Athletics, turned to proprietary data analytics, aided by a young gun from Harvard with a degree in economics. It changed baseball.

Before Beane, who’d heard of OBP or OBA? – on-base percentage or on-base average. Baseball teams bought players on how they looked, how they swung, their runs batted in, their average, even if they had a good-looking girlfriend (sign of confidence). Classic old-school fundamentals. Continue reading →

While Florida voted, Morgan Stanley won the Facebook primary.

A unit of Thomson Reuters broke word that the big bank will helm a team of other big banks for what in May could be the biggest IPO, raising perhaps $10 billion.

We don’t care who underwrites the deal. But thinking about Facebook and its banking soldiers of fortune, the giant and the mighty in massive conformity, we thought of the markets.

In the data we track, Morgan Stanley is king of index program-trading executions. For large clients of ours, its volumes surpass those of small exchanges. At the Nasdaq, Morgan Stanley is the top liquidity provider, trumping fraternal behemoths BofA Merrill and Barclays and high-frequency clearing maestro Wedbush. Last June, Global Custodian’s annual ranking of prime brokers – banks bundling securities services for the buyside – slotted Morgan Stanley a close second to Goldman Sachs.

We wrote in September how the same names show up everywhere. The ones running books of derivatives, making markets in Treasuries, trading bonds electronically and correlating seas of equity executions are the same.

Lost in the long shadows of the large was word that technology research boutique Kaufman Brothers closed its doors this week. Ticonderoga Securities shut down earlier is month. Formerly Reynders Gray & Co. on the floor of the NYSE, the firm offered differentiated research, direct-access trading and agency executions. WJB Capital, another boutique, shuttered around January 4 after failing to raise capital and seeing its financing costs rise as high as 25%. Continue reading →