In the last blog I expressed my view that sentiment and false information can have an impact on the Quindell share price. See here.
Several have since asked for evidence. This blog therefore looks at the Swinton contract and what happened to the share price when false news released into the market.
On the 8th December 2014, Shareprophets issued a blog containing the following statement.
“Just a couple of months ago Swinton was going to renew. I am told that the release was ready. However an industry source tells me that Winton [sic] has now got cold feet and has refused to sign an extension as of today and is now looking at other options.”
On the 9th and 10th of December the Quindell share price fell as highlighted in the following chart.
On the 10th December Quindell issued an RNS (see here) that stated:
“Swinton Group Limited (“Swinton”), one of the UK’s largest insurance brokers with over 1.2 million motor policy holders has signed a multi-year contract renewal with Quindel.”
The share price on the 11th December then started to recover. Unfortunately by this time the impact of the inaccurate blog from Shareprophets resulted in the share price remaining below the level pre the Shareprophets blog.
This in my opinion, is evidence the share price, has at times been impacted by inaccurate information. How many private investors sold their holding based on this information?
I have a few simple rules when I read any blog or news article.
1. Has the authors previous articles proved to be credible. In this case the answer is no. See here
2. Ignore any article that contains a phrase such as “an industry source said”. This is the same as saying what you are reading is rumour. In this case the article was based on an anonymous industry source.
3. Ignore any article issued over a weekend that claims to have asked a company for comment and the company hasn’t responded. Most requests for a comment go unanswered outside of normal office hours.
4. Do your own research on the content of any article or blog.
NB: Other events during the time mentioned in this blog will also have impacted on the share price.