A Penny Stock Called Nestor Just Surged 1900% Cause People Confused It With The Company That Google Bought

Nestor Inc is a Providence, Rhode Island-based company that sells automated traffic enforcement systems to local governments. It has 89 employees and trades over-the-counter under the ticker "NEST."

But that's not to be confused with Nest - the high-tech thermostat and smoke detector company founded by former iPod genius Tony Fadell and sold to Google for a cool $3.2 billion earlier this week.

Don't tell that to savvy investors! Nestor Inc. (the penny stock) is up 1900% on the news, as investors confuse the two companies. There's actually pretty decent volume here too, suggesting that a good amount of people made the mistake or are trying to anticipate that people might. The surge was first noted by Kid Dynamite's blog.

Bloomberg's Matt Levine asks the natural follow-up question.

If you had advance knowledge of the Google/Nest deal, would you buy some Nestor, Inc. shares? And would that be insider trading?

- Matt Levine (@matt_levine) January 15, 2014

Basically, it would have been a pretty smart investing play to see the Nest deal, anticipate the dumb buyers making the Nest/Nestor mistake, and then ride the Nestor stock up.

It sounds like a scene out of The Wolf of Wall Street.

Reuters' Felix Salmon and CNBC's John Carney both argued on Twitter that, yes, that would in fact be insider trading. If you made material gains via non-public information of the deal, that's insider trading folks! But we're probably not likely to see this taken to court.

And, as Salmon noted, you might as well just wait for the deal to have been announced, since you'd make as much money the legal way.