Mystery 'Dude' Rattles Turkish Stock Traders With Massive Bets(bloomberg.com)
bloomberg.com
Mystery 'Dude' Rattles Turkish Stock Traders With Massive Bets
http://www.bloomberg.com/news/articles/2016-03-10/mystery-dude-rattles-turkish-stock-traders-with-massive-bets
48 comments
Turkey was one of the markets I used to cover when I was a trader. Amongst the EMEA emerging markets, Turkey is one of the most popular/active in terms of hedge fund trading. They made a concerted effort in recent years to upgrade their market infrastructure (including the introduction of direct market access, where brokers will sponsor their clients to connect to the exchange electronically).
I think it's unlikely that the new market actor(s?) are taking big directional bets (although it's certainly possible). I think it's more likely that they're market-making or executing futures or index arbitrage strategies (in which case, what would look like a directional bet in the cash equities market would be offset by a corresponding trade in another security or derivative.
I think it's unlikely that the new market actor(s?) are taking big directional bets (although it's certainly possible). I think it's more likely that they're market-making or executing futures or index arbitrage strategies (in which case, what would look like a directional bet in the cash equities market would be offset by a corresponding trade in another security or derivative.
How is the identity of the investor unknown? Is it that Turkey is very lax on identification requirements and no one really knows who this is? Or, is it the case that someone (the brokerage, I guess) knows, but it's private information?
It sounds like it is the latter. The company they mention in the article (Yatirim Finansman) literally translates to "Investment Financing". A name so generic that it just has to be a front. The article points out how this was a small volume brokerage firm that suddenly started executing this entity's trades and started dominating the market in terms of volume.
Maybe the name sounds generic because of this:
"Yatırım Finansman (YF Securities), Turkey's first brokerage house, was founded on October 15, 1976 by 13 major banks led by Isbank and the Industrial Development Bank of Turkey (TSKB)."[+]
[+] http://www.yf.com.tr/YF/en/about-us/yf-securities-in-brief.a...
"Yatırım Finansman (YF Securities), Turkey's first brokerage house, was founded on October 15, 1976 by 13 major banks led by Isbank and the Industrial Development Bank of Turkey (TSKB)."[+]
[+] http://www.yf.com.tr/YF/en/about-us/yf-securities-in-brief.a...
Very interesting. That's more than enough to at least make them a legitimate financial entity. I wonder how much control the government has over YF at this point in time.
I can't help but wonder if the dude is actually another country looking to gain greater control or influence over Turkey.
It'll be interesting to see if he actually tries to take control of any of the companies, I'm not sure of the ruling in Turkey but in the US if they buy more than 5% they have disclose if they intend to acquire.
Can you be prevented from buying more stock if you say you do intend to acquire? As in, can the company tell you flat-out to stop buying, because of course they can always raise the price or sell to someone else, etc.
[deleted]
If you intend to acquire then at some point you might have to make a tender offer.
Russia has motive.
I waited for that accusation. Not long though.
Not an accusation. Just an observation.
And that's all I've got. Could be pretty much anyone, clearly.
Well. Anyone of the top 0.01% or so, if you want to narrow your search down a tad.
And that's all I've got. Could be pretty much anyone, clearly.
Well. Anyone of the top 0.01% or so, if you want to narrow your search down a tad.
All you have to do to gain control over a middle eastern country is claim that there are terrorists there or that the leader of the country is a tyrant. Seems to have worked beautifully in the past without question.
It's Turkey. IT IS NOT THE MIDDLE EAST.
Now, that being said, the political situation there right now is increasingly hellish. What's going on there now is the result of a very long game that has been played out since before the modern Turkish republic, founded by Ataturk.
Now, that being said, the political situation there right now is increasingly hellish. What's going on there now is the result of a very long game that has been played out since before the modern Turkish republic, founded by Ataturk.
It's not unusual to include Turkey in the Middle East region:
http://www.britannica.com/place/Middle-East
https://en.m.wikipedia.org/wiki/Middle_East
http://www.britannica.com/place/Middle-East
https://en.m.wikipedia.org/wiki/Middle_East
Turkey is not a middle east country and Turkish people are not arabs. We have a problem with having a good education and electing strong leaders among us.
Hah, the funniest part is, at the time of this writing at least, none of the Turkish news agencies have published this story.
The dude abides, indeed.
edit: now they did :D
The dude abides, indeed.
edit: now they did :D
whats the benefit for the trader doing this and then why wouldn't others do the same?
Apparently this investor desires to own Turkish stocks more than other people want to own Turkish stocks. If a hypothetical party wants to own Turkish stocks more than this investor, there are a variety of people who presently hold Turkish stocks who would be happy to oblige.
Most reporting on the markets is really, really boring when you get right down to it. "He's high-frequency trading! And placing big, risky bets! And who even knows if it's a he?!" sells a lot more papers than "Investment fund purchases stock legally on the open market; chooses not to broadcast intention to do so by using smoke signals but instead uses a computer."
Most reporting on the markets is really, really boring when you get right down to it. "He's high-frequency trading! And placing big, risky bets! And who even knows if it's a he?!" sells a lot more papers than "Investment fund purchases stock legally on the open market; chooses not to broadcast intention to do so by using smoke signals but instead uses a computer."
No. It can just be a market maker. More movements and liquidity = more traders and investors. No one wants to trade or invest in dead markets.
Whoever it is seems to have skipped from one local brokerage to the next honing his system and turning the latest, Yatirim Finansman, into the biggest net buyer on the market by far. YF is elsewhere explained to have represented ~2% of the market prior to this actor deciding to use it as his brokerage.
It is very difficult for me to credit a market maker with that sort of impact on net buys, unless the market maker is very, very, very bad at their job.
It is very difficult for me to credit a market maker with that sort of impact on net buys, unless the market maker is very, very, very bad at their job.
[deleted]
With his funds he's able to influence stock price movements, which others then respond to. For instance, you buy into a stock, the price jumps suddenly. Other traders, not knowing if there's some inside information or whatnot, pile in, just in case. You quietly get out, take the profits.
could you elaborate on legality of this?
IANAL: Buying something you think is cheap is legal, even if you know your buying it will push the price up as a side effect (any big order will move the price, if you want to buy or sell a lot it's basically impossible to do that without affecting the price). Selling it afterwards because you think the price has gone up to more than the asset is worth is legal. What's not legal is deliberately manipulating the price, and it can be hard to tell the difference from the outside. Some traders' moral instinct is that if you're taking on the risk (i.e. if you're putting your orders out there for a while where you're going to trade if anyone wants to) then it must be legitimate, which has a certain intuitive appeal but is not the current law.
There's nothing wrong with it, as long as you're influencing prices only with your own funds, not conspiring with others or trading on information which you're not supposed to trade on.
On smaller exchanges with less liquidity you see it all the time. If average trading volume is 20k shares, buy 50k and you will move the price. Then sell in small blocks, maybe through multiple brokers...
On smaller exchanges with less liquidity you see it all the time. If average trading volume is 20k shares, buy 50k and you will move the price. Then sell in small blocks, maybe through multiple brokers...
hedge funds
This is basically what happens with company 401ks. It is totally legal, although op claims about getting out "quietly" are kind of absurd. The sell orders are available for everyone to see (and bid on).
This is basically what happens with company 401ks.
In the reality most of us inhabit, a 401k is a type of company-sponsored retirement account. The accounts are allowed to invest in a variety of securities, most commonly in one of a limited selection of mutual funds. There is no circumstance under which 401k contributions materially move the market.
If I sound mildly put out in this comment, it is because HN comments about the stock market often make very confident claims which bear only the most tenuous connection to reality. It's as if someone on a Wall Street message board had asked "Why is Chrome faster than Internet Explorer?" and received the answer "Because it is written in Unicode."
And outside the scope of this particular comment, often times responses like "Chrome is not, in fact, written in Unicode. Unicode is an imprecise name for part of a family of methods of encoding text in various human languages, not a programming language. A substantial part of Chrome, including most of the rendering engine, UI layer, and network stack is written in C++; Chrome also makes heavy use of other languages internally. Returning to the question of why Chrome is fast: this is less about language choice and more because substantial effort has been taken to ensure that Chrome is fast. 'Fast' is a complicated topic in browsers. In terms of user-visible performance, one thing which makes browsers seem fast is the Javascript runtime. Chrome uses V-8, a run-time built specifically for Chrome at the cost of hundreds of millions of dollars, which is optimized for speed." are met with "Sure that's what you would say IF YOU WERE A GOOGLE SHILL."
In the reality most of us inhabit, a 401k is a type of company-sponsored retirement account. The accounts are allowed to invest in a variety of securities, most commonly in one of a limited selection of mutual funds. There is no circumstance under which 401k contributions materially move the market.
If I sound mildly put out in this comment, it is because HN comments about the stock market often make very confident claims which bear only the most tenuous connection to reality. It's as if someone on a Wall Street message board had asked "Why is Chrome faster than Internet Explorer?" and received the answer "Because it is written in Unicode."
And outside the scope of this particular comment, often times responses like "Chrome is not, in fact, written in Unicode. Unicode is an imprecise name for part of a family of methods of encoding text in various human languages, not a programming language. A substantial part of Chrome, including most of the rendering engine, UI layer, and network stack is written in C++; Chrome also makes heavy use of other languages internally. Returning to the question of why Chrome is fast: this is less about language choice and more because substantial effort has been taken to ensure that Chrome is fast. 'Fast' is a complicated topic in browsers. In terms of user-visible performance, one thing which makes browsers seem fast is the Javascript runtime. Chrome uses V-8, a run-time built specifically for Chrome at the cost of hundreds of millions of dollars, which is optimized for speed." are met with "Sure that's what you would say IF YOU WERE A GOOGLE SHILL."
I guess I could have explained that better. What I was trying to express is that money managers who are working with very large sums of money have difficulty getting out of very large positions.
Some companies have 401ks plans that are working with very large sums of money. This problem doesn't apply to all 401ks. This wasn't the best example.
Um... not sure what to do with your comments on the shill ecosystem.
Some companies have 401ks plans that are working with very large sums of money. This problem doesn't apply to all 401ks. This wasn't the best example.
Um... not sure what to do with your comments on the shill ecosystem.
What is a circumstance in which the assets under management for a company 401k would need to get out of a very large position?
The fund manager decides to invest elsewhere?
Here is Fidelity's Contrafund summary: https://fundresearch.fidelity.com/mutual-funds/composition/3...
FACEBOOK INC A BERKSHIRE HATHAWAY INC CL A WELLS FARGO & CO ALPHABET INC CL A APPLE INC AMAZON.COM INC ALPHABET INC CL C VISA INC CL A STARBUCKS CORP NIKE INC CL B % of Total Portfolio 31.30%
I guess a worst case scenario is one of the core assets went out of business. The asset portfolio doesn't stay static- if you look at the site above, it says that these are the assets as of a specific date.
Here is Fidelity's Contrafund summary: https://fundresearch.fidelity.com/mutual-funds/composition/3...
FACEBOOK INC A BERKSHIRE HATHAWAY INC CL A WELLS FARGO & CO ALPHABET INC CL A APPLE INC AMAZON.COM INC ALPHABET INC CL C VISA INC CL A STARBUCKS CORP NIKE INC CL B % of Total Portfolio 31.30%
I guess a worst case scenario is one of the core assets went out of business. The asset portfolio doesn't stay static- if you look at the site above, it says that these are the assets as of a specific date.
Also, Chrome is about three times slower than Firefox in asm.js performance. /missing-the-point
You buy one big block, say 50% of daily volume. Then you move the shares around, in the next few sessions sell smaller blocks through multiple brokers. The key is to buy enough volume to move the price, not so much to make exiting the position difficult. I don't do things like this, but I did see it on lower-liquidity exchanges all the time, and used to trade in small caps where a $10K bid could move the price ~5%... And if I was motivated to sell, the best bet was to break it up into smaller pieces, and sell over the course of a session or two. If daily volume is 50K, and I want to sell 20K, I can't put it all up at once.
Also, on a typical exchange like the NYSE, HKex, Euronext Paris, etc..., the volume is so large you generally don't even bother to look at who's buying or selling. On smaller exchanges you're constantly glued to the screen, looking at the sellers, trying to guess what they're up to.
I imagine company 401ks are managed by in a fairly conservative way. Big positions in fundamentally solid large caps, holding for a long time, selling only when you need to cash out or the price moves beyond a certain range. Traders basically manage their trades in the exact opposite fashion - short, extremely speculative trades, no regard for fundamentals, on smaller exchanges you mess with people's emotions, etc...
Also, on a typical exchange like the NYSE, HKex, Euronext Paris, etc..., the volume is so large you generally don't even bother to look at who's buying or selling. On smaller exchanges you're constantly glued to the screen, looking at the sellers, trying to guess what they're up to.
I imagine company 401ks are managed by in a fairly conservative way. Big positions in fundamentally solid large caps, holding for a long time, selling only when you need to cash out or the price moves beyond a certain range. Traders basically manage their trades in the exact opposite fashion - short, extremely speculative trades, no regard for fundamentals, on smaller exchanges you mess with people's emotions, etc...
why wouldn't others do the same?
Not many people have $160m to throw around on the Turkish stock exchange. It's a riskier market than the more established western ones.
Not many people have $160m to throw around on the Turkish stock exchange. It's a riskier market than the more established western ones.
Pretty obvious this is an algotrading fund that has turned up with new kit and happen to be the largest player because the market has so little liquidity.
50p says it's an investment bank or hedge fund familiar to most people who know something about this area, and the people involved might be surprised themselves to find liquidity is so low that they are market making.
50p says it's an investment bank or hedge fund familiar to most people who know something about this area, and the people involved might be surprised themselves to find liquidity is so low that they are market making.
I wonder how Turkish Stock exchange laws can be this lax, they should have some information in public domain about people trading
We have not so many strictly enforced laws to prevent these kinds of activities from happening but many to prevent them from being documented.
"Indeed, the bigger issue may not be who “the dude” is, but what it is, according to Isik Okte, an investment strategist at TEB Invest/BNP Paribas."
Can anyone here comment on the rumors that some of the later challenges in Stockfighter.io use the Turkish stockmarket as a real-life backend?
1) The title is pretty misleading, the identity is known to regulators. Most funds will use a sell side bank who has access to the market to put their orders out. Especially for a country like Turkey where it doesn't make much sense to buy your own pipe.
Its just the rest of the market who doesn't know the identity of the firm. This is common in all countries.
2) Developing countries markets almost always have very little liquidity so its not surprising for a firm to come in with a global macro view and move hte market when trying to put their position on.
In fact its the one place where people still act like the opening scene, atleast I think it was the opening scene, from Liar's Poker (http://www.amazon.ca/gp/product/B003E20ZRY/) where the trader tries to bully the market by deciding bonds should go up so he buys a whack of them and then when the market fails to move he doubles down on his bet and buys more causing the rest of the market to go along with him.
You can't really strong arm developed world markets but you still can bully developing countries markets in this way. You are essentially playing chicken.
The problem is always how do you close your position. If buying so much moves the markets then its obvious that selling will also do the same. usually you are forced to sell your position to a big sell side firm who can take the exposure.