North Circle TT -
Although focused on long-term value, North Circle Advisors will exploit temporary mispricings to open positions. For example, portfolio manager Bill Bradley pegged LIM Corporation’s fair value per share at $28 yesterday; however, LIM’s stock price seems to have overreacted to a competitor announcement prior to market open today. The follow events unfold over the course of the morning:
PRIOR CLOSE: LIM closed at $30.05
PRE-MARKET: LIM priced at $20.34
MARKET OPEN: LIM opens at $22.15
10:00 AM: LIM trading at $23.01
10:00 AM: Bradley confirms the overreaction with target price of $28
10:05 AM: Bradley instructs trader to buy 25,000 shares, with a limit price of $28 when LIM is trading at $23.09
10:22 AM: Trader finishes the buy with an average purchase price of $23.45
Q. Calculate the delay cost incurred in trading the LIM order.
Here they have taken 23.01 as decision price - I do not understand why? Bradley just confirms overreaction ?? that does not mean he has decided to trade?