25 okt 2011
Since the beginning of August we have been witnessing a massive slide of all equity prices due to political instability in the U.S. and Europe. During the first days of the massive losses one AEX listed share stood out in a negative way. Fugro a Dutch exploration company that is of great value to the entire oil industry, went flag forward and seemed to be leading the way down with losses up to 9% per day.
- There was no notable news about Fugro so I was flabbergasted by the monstrous hits their share price was taking. Especially when one realizes their Beta (systematic risk, in comparison to the market (AEX) as a whole) over the last 5 years is around 1.173, meaning if the AEX Index would lose 10% they should lose around 11.7%, this was far from being the case, for instance on August 4th the AEX Index lost 3.19% the same day Fugro had a whipping loss of 8.55%.
I just couldn’t get my head around the dazzling 22.8% loss the share had taken between the 1st and 11th of August, over the same period the AEX Index had lost 13%, using the 5 year Beta a loss of 15.2% could be expected but the difference was just too big. Especially when one takes into account that in the previous weeks their price target had been raised by several banks. - On August 12th the smoke cleared.
That day Fugro announced their earnings over the first half year.
The earnings had dropped and the outlook was negative.
This time I could understand the 4% loss, I couldn’t understand the 5% rebound the next day however. The next days Fugro didn’t deviate from its beta as much.
I am not accusing people of insider trading, I wouldn’t even know who to accuse! But what I am saying is that if I would be working for the AFM (the Dutch regulator of financial markets)
I would take a closer look into it. However in such unusual market conditions such a crime is almost impossible to prove and so it seems it might just have been a perfect heist!
