Dark Pool Activity: What’s Happening With Institutions Trading $34 Million in Pershing Square Stock?

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At 9:12 a.m. Tuesday, Money flow Mel (@MelStone31) posted a picture to Twitter stating that the institutions traded large blocks of Pershing Square Tontine Holdings, Ltd PSTH on a dark pool trade.

The deals are interesting because on Monday, the special-purpose acquisition company announced that it had failed to find an acquisition target that met its criteria and that it would return $4 billion in trust capital to the shareholders.

Trades : At 7:45:55 a.m., an institution traded 200,000 shares of Pershing Square at $20.08. The trade is equivalent to a $4.01 million bet on the company.

At 7:50:59, another big block of 250,000 was completed at $20.08, a bet of $5.02 million. The trades were followed by dark blocks of 500,000 shares at 7:51:55 a.m. ($10.04 million), 250,000 shares at 7:58:58 a.m. ($5.02 million) and 514,449 shares at 8:03:18 ($10.33 million), all of which were completed at a price of $20.08.

In total, the blocks in the dark pool amount to $34.42 million in shares.

More than 31 million shares of the UK investment trust had traded hands at the time of writing on Tuesday, compared to a 10-day average of 1.59 million shares.

What are dark pools? Dark pools (or black pools), named for their lack of transparency, are private alternative trading systems that allow institutional traders to buy and sell large amounts of stocks anonymously and therefore without affecting movements. of the market.

These exchanges were developed in the 1980s and as of February 2022, 64 dark pools were registered with the Securities and Exchange Commission.

Controversy: The existence of dark pools hit the public psyche in early 2021, when GameStop Company EMG and AMC Entertainment Holdings, Inc. CMA skyrocketed 1,041% and 624%, respectively, in four days.

In January and February of that year, institutional ownership of GameStop shares exceeded 100% of free float, indicating that more shares were on loan than were available. The naked short, which mostly takes place on dark pools, was blamed for the gap, shedding light on the existence of alternative exchanges.

See also: Why Digital World Acquisition (DWAC) Stock Is Rising Today

Dark Pools and Retail Traders: Direct dark pool trading is reserved for institutional traders and investors, but after the memes saga, retail traders have become more aware of how to use dark exchange data to guide their strategies. This has resulted in the emergence of a number of apps to provide dark pool streams.

About 40% of all trades executed take place on dark pools, and when large blocks of individual stocks are bought or sold on these exchanges, retail traders can use the information to understand what “smart money” is doing. “. The difficulty with dark pool data, however, is that due to its inherent secrecy, the transactions give no indication as to whether an institution is buying or selling the stock.

For this reason, retail traders can monitor dark pool data for above-average trading volumes on an individual stock and cross-reference this information with the options feed. If there are above average dark drawdowns on a stock, coupled with a high level of open market call buying, this is a good indication that institutions are buying on the ATS. Conversely, if large black pool draws are followed by a large number of open market put option purchases on the same security, the institutions can be assumed to be selling on the ATS.

See also: Beginner’s Guide to SPACS

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