A little humour article on valuation in the Australian today:
FAT Finger award for the week has to go to what we used to call Tricom Equities, the reincarnation of which, Stonebridge Securities, has copped a $30,000 fine for accidentally trying to sell half a million of the wrong stock in May last year.
The broker got an order to sell a line of Panaust (PNA) at 42c and the adviser put in the wrong stock code on an order to sell 500,000 of them at 42.5c, nominating Panoramic Resources (PAN) instead. Unfortunately Panoramic had been trading at $1.87.
Easy to do? Yes, except the adviser ignored a warning from the machine that the order was more than 2 per cent out of market, the trader's equivalent of the airline pilot's "pull up" siren warning when the plane gets too close to terra firma. It then went to a colleague, a designated trading representative or DTR, who didn't get any such warning and who authorised it.
By the time the dust cleared, Panoramic shares had been crunched from $1.87 to $1.49, a drop of about 20 per cent, and the Dispute Governors Committee ruled that all trades at or below $1.60 should be scratched, which resulted in 68 trades being reversed. By the way, both stocks have subsequently prospered. Panaust is now at 53c and Panoramic's at $2.42.
A clue to how easy it is to get these things wrong is that yesterday's ASX announcement accidentally described Panaust as Panhurst. You'd be relieved to hear that there's no such listed company.
PNA Price at posting:
$2.58 Sentiment: LT Buy Disclosure: Held
