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The interview Warren Buffett Sells 30% Stake In IBM | Squawk Box | CNBC on May 5, 2017 mentioned that there exist "stock watch firms" that spotted Warren Buffett sold 30% of his stake in IBM before it was announced publicly. How do such firms glean such information (i.e., who is buying and selling stocks before it is announced publicly)?

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  • $\begingroup$ By publicly, are you referring to SEC Forms 13-F/D/G and Forms 3, 4 and 5? $\endgroup$ – David Addison May 17 '17 at 0:13
  • $\begingroup$ @DavidAddison Yes, or publicly announced in some interview. $\endgroup$ – Franck Dernoncourt May 17 '17 at 0:25
  • $\begingroup$ @frank-demoncourt. That's a good question. $\endgroup$ – David Addison May 17 '17 at 0:27
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This may seem obvious but, this is how:

Party A (People with well-established relationships with prime brokerage ("PB") directors within PB's) gather information from Party B (PB directors or higher up). PB directors have the info. What they receive for disseminating it varies by the nature of the relationship they have/had with Party A.

Party B has the info because when you operate as an investment management vehicle, you need to disclose certain things about yourself before the PB even accepts you as a client--you can't just open up an account at any PB with $10,000 because you feel like it; this isn't Scottrade we are talking about. What gets disclosed by the investment manager's is often far more than should be disclosed--such as who their investor bases/capital sources are. For example, if someone says that they have a rich, old, white man from Nebraska who owns a large insurance/holding company as an investor and proceeds to buy millions of shares of a company such as IBM it doesn't take a genius to understand what is going on. This happens pretty much as plainly as I am hypothetically suggesting.

After that, Party B is supposed to keep what they know confidential. This does not always happen, naturally. If you are Party A and are well connected to many Party B's you can parse all relevant info together and know what "Blue Horseshoe" is doing with relative ease. I say many Party B's because even though the most sophisticated investors operate under different entities within many PB's, wall street is not as big a place as many people think and when multiple people are hunting the same animal for the same reason, that animal gets caught. People talk, especially when PB directors know which accounts to keep on their screen and are being compensated (in one way or another) to do so.

"Stock watch firms" are apparitions. They don't exist for anyone to know about publicly or for any sort of small fee. They are the old boys club reincarnated. The ones that do "exist" are not well connected and are frauds. By that I mean they are fraudulently impersonating people who are engaging in illegal acts.

I wouldn't have answered this save for the fact that there seems to be a decent amount of interest in this question. Call this whatever you wish but like it or not, it is a reality.

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    $\begingroup$ Sounds like a cross between gossip at the ladies club and libertarian capitalism ;) $\endgroup$ – Alex C May 18 '17 at 22:25
  • $\begingroup$ @alexc you might as well make that an answer! $\endgroup$ – amdopt May 18 '17 at 22:40

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