DEFINITION of 'Rumortrage'

A term often used by traders to refer to increased trading caused by a takeover rumor. Rumortrage is a slang term used by many on the Street to refer to a situation where a public rumor of a potential merger or acquisition leads to increased trading by retail investors in the hope that the rumor will lead to a jump in stock prices.

BREAKING DOWN 'Rumortrage'

While rumortrage is not an uncommon practice, it often leads to uninformed retail investors becoming M&A speculators, taking undue risks in the wake of nothing more than a rumor or hearsay.


For example, if firms A and C are both in the auto industry and rumors say that firm A will take over firm C, an increase in trading in firms A and C's stock illustrates rumortrage.

RELATED TERMS
  1. Garbatrage

    An increase in price and trading volume in a particular sector ...
  2. Whisper Stock

    Shares in a company that is rumored to be the target of a takeover ...
  3. Poop And Scoop

    A highly illegal practice occurring mainly on the internet. A ...
  4. Takeout

    A slang term denoting the purchase of a company through an acquisition, ...
  5. Bear Raid

    The illegal practice of ganging up to push a stock's price lower ...
  6. Merger Mania

    A period of time with significant merger and acquisition activity ...
Related Articles
  1. Investing

    Twitter Stock Rises on More Takeover Speculation (TWTR, MSFT)

    Takeover speculation is not new for Twitter, however. The market has witnessed these "buy the rumor" type of events on more than one occasion.
  2. Investing

    Twitter's Shares Rise on Acquisition Reports

    Twitter's shares received a bump this morning after reports surfaced yesterday of a private equity firm and noted venture capitalist being interested in the company.
  3. Investing

    3D Systems Stock: Why Not to Buy on Rumors

    It's not the first time unsubstantiated rumors -- as logical as they may appear -- send a stock skyrocketing, and it won't be the last: Early on Monday, scuttlebutt began swirling that 3D Systems ...
  4. Managing Wealth

    Investopedia's Oddest Business and Investing Terms

    The oddest business and investing terms found on Investopedia.
  5. Financial Advisor

    Has Oil Hit its 2016 Low?

    Most strategists are bullish on oil, but this strategist is an uber bear.
  6. Investing

    So Maybe Coach Was Pursuing Burberry After All

    Rumors of a possible merger between fashion houses Coach (NYSE: COH) and Burberry made the rounds in October, but were flatly quashed as nonsense. However, if the latest Financial Times report ...
  7. Investing

    Fitbit Busts Bogus Takeover Bid Rumor

    At one point during trading Thursday,  Fitbit (NYSE: FIT) stock was up 8% on speculation that a China-based firm called ABM Capital had submitted a bid to acquire the fitness tracker for $12.5 ...
  8. Investing

    Cisco Rumors: Massive Layoffs Coming Soon

    Ahead of fiscal fourth-quarter 2016 and full-year earnings that are scheduled for release Wednesday after the close, Cisco (NASDAQ: CSCO) stock has come under pressure: It dropped more than ...
  9. Small Business

    What Merger And Acquisition Firms Do

    The merger or acquisition process can be intimidating. This is why merger and acquisition firms step in to facilitate the process.
  10. Small Business

    How To Profit From Mergers And Acquisitions Through Arbitrage

    Making a windfall from a stock that attracts a takeover bid is an alluring proposition. But be warned – benefiting from m&a is easier said than done.
RELATED FAQS
  1. What is "hammering"?

    "Hammering" is a situation where large sale orders are placed against a particular stock because investors believe that the ... Read Answer >>
  2. Why is the British pound / U.S. dollar currency pair known as "trading the cable"?

    The British pound / U.S. dollar currency pair is one of the oldest and most widely-traded currency pairs in the world. The ... Read Answer >>
  3. When an investor is watching a proposed corporate merger and buys the stock of the ...

    The correct answer is a. A highly sophisticated investment strategy, risk arbitrage involves the buying of a company that ... Read Answer >>
  4. Why do some mergers and acqusitions fall through?

    Most merger and acquisition (M&A) activities are carried out successfully, but from time to time, you will hear that a deal ... Read Answer >>
  5. What is the outlook for mergers and acquisitions in the utilities sector?

    Examine the outlook for the utilities sector going forward, with a particular focus on the current sector trends in mergers ... Read Answer >>
Hot Definitions
  1. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  2. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  3. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  4. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  5. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
Trading Center