Confused investors bid up shares of Nestor 1,900%

This company isn't Nest, the company Google just bought for $3.2 billion. But people sent the penny stock soaring anyway.

By MSN Money Partner Jan 15, 2014 12:49PM
Image: Stock market (© Digital Vision Ltd./SuperStock)By Steven Perlberg, Business Insider

Nestor Inc. (NEST) is a Providence, R.I., company that sells automated traffic enforcement systems to local governments. It has 89 employees and trades over-the-counter under the ticker "NEST."

But that's not to be confused with Nest -- the high-tech thermostat and smoke detector company founded by former iPod genius Tony Fadell and sold to Google (GOOG) for a cool $3.2 billion earlier this week.


Don't tell that to savvy investors! Nestor Inc. (the penny stock) was up 1,900 percent Tuesday on the news as investors confused the two companies.


There was actually pretty decent volume here too, suggesting that a good amount of people made the mistake or are trying to anticipate that people might. The surge was first noted by Kid Dynamite's blog.


Bloomberg's Matt Levine asks the natural follow-up question.
















Basically, it would have been a pretty smart investing play to see the Nest deal, anticipate the dumb buyers making the Nest/Nestor mistake, and then ride the Nestor stock up.

It sounds like a scene out of "The Wolf of Wall Street."


Reuters' Felix Salmon and CNBC's John Carney both argued on Twitter that, yes, that would in fact be insider trading. If you made material gains via non-public information of the deal, that's insider trading folks! 


But we're probably not likely to see this taken to court.


And, as Salmon noted, you might as well just wait for the deal to have been announced, since you'd make as much money the legal way.


Nest shares were flat Wednesday.


More from Business Insider



Tags: GOOG
10Comments
Jan 15, 2014 3:05PM
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Maybe they should look and see how many shares were purchased before the official announcement was made. If a typically non-moving stock suddenly startms moving before an announcement was made then it is absolutely insider trading and should be investigated.
Jan 15, 2014 2:11PM
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Just another example of the idiots that are in the stock market.  They are clueless and so are the self-proclaimed  investment "experts".  Somewhere The Wolf of Wall Street is laughing at more suckers!!
Jan 15, 2014 2:23PM
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Sweet Geezus....Who is really doing their research..??
Jan 15, 2014 2:44PM
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So much for the the Efficient Market Hypothesis
Jan 15, 2014 3:47PM
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He, he that's a hoot! So much for building a nest egg.
Jan 15, 2014 5:37PM
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Gee...I though Google bought "Nestle", so I just bought a boatload of shares
Jan 16, 2014 10:17PM
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A future Republican in the making.

http://www.youtube.c​​​om/watch?v=AukE25i​s​p​VY

They are simply adorable and loving little things aren't they?
Jan 19, 2014 10:00PM
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Many penny stock investors are stupid.  I stay away from low-priced stocks if their business model makes no sense.   
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