Traders — human and otherwise — churned about $91 million worth of Avon Products Inc. stock in the 25 minutes after a takeover filing the company is now treating as a hoax.
That’s four times as much as traded all day prior to then, according to data compiled by Bloomberg. More than 12 million shares went off in 19,941 trades during the stretch when the stock went from $6.60 to $8 and then back to about $7.20 at noon, the wildest minutes of the deluge. The rush came in between three separate circuit breakers that halted trading because of the volatility.
“Someone walked away with a big pot of money,” said Skip Aylesworth, a portfolio manager at Hennessy Funds in Boston, where he helps oversee about $5 billion. “I wouldn’t be surprised if part of the volume is people saying ‘thank you very much, Avon,’ and moving on.”
The U.S. Securities and Exchange Commission enforcement division is reviewing the legitimacy of the buyout offer, a person with knowledge of the matter told Bloomberg. A filing with the SEC indicated that a private-equity firm named PTG Capital Partners Ltd. made a bid to buy Avon, but the cosmetics company said it never received an offer.
Avon trading about 756,000 shares each half hour from 9:30 to 11:30 a.m., then jumped to 8.6 million from 11:30 a.m. to noon and peaked at 22.6 million in the half hour after that. It’s since fell to 3.3 million from 1:30 to 2 p.m.
The company has had almost 60 million shares change hands today, the highest daily figure in two months. Avon has had average volume of 14 million per day in 2015. Today’s trading range of 21.8 percentage points is the widest for the company since at least 2009 and more than four times the year-to-date average of 4.9.
The SEC filing included errors, including naming a law firm that doesn’t exist. Phone calls to the contacts listed on the filing were unsuccessful. Avon sold its stake in Avon Japan to similarly-named private equity firm TPG Capital in 2010.
Avon has posted three straight years of losses and declining sales, putting pressure on the company to explore its options. Linda Bolton Weiser of B. Riley & Co. had estimated that the entire business could fetch a takeover valuation of about $6 billion.
About $91 Million of Avon Stock Traded at Peak of Frenzy