Thursday, July 5, 2007

Trading Ahead of the Hilton Hotels Offer

Trading in Hilton Hotels Corp.'s stock and call options jumped wildly right before the announcement after the close of trading on July 3 that Blackstone Group would take the company private at $47.50 per share.  The stock price had been hovering in the low thirties, although on July 3 the shares jumped over $2 per share to $36, still more than $10 from the offer price.  According to a Bloomberg story (here), trading in Hilton Hotels call options was up over nine times the average volume before the announcement, and a number of trades were in out-of-the-money contracts, indicating that -- here's a shocker -- someone had a pretty strong inkling something was about to happen to the stock.  Another deal, another SEC insider trading investigation, in all likelihood.  We'll see if anything comes of it. (ph)

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