Don’t Hang Around Too Long in the Facebook Proxy Trades

One more point regarding these Facebook proxy trades that are ripping yesterday and today as the $FB IPO date nears.

Today, $RENN, $YELP & $P are also all running in addition to the $ZNGA, $GSVC and $FIO that I mentioned in the earlier post (all up again today).

I view these plays as a noise trader arbitrage in that as the noise into the event (in this case the $FB IPO) increases, the related stocks also run even as the smart guys, the arbitrageurs, have already positioned themselves long in anticipation.

There is a trajectory to this phenomenon.

The smartest guys got in last Friday, the second smartest guys got in yesterday and the third smartest guys are getting in today.

You do not want to be the fifth or sixth smartest guys

There will be a sell off into these names as the smartest noise trade arbitrageurs who bought last week take profits so don’t get in late or stay too long.