Knobias Clip Report (04-03-2008)
Submitted By Knobias ClipReport
MF: Shares Experience Increased Volatility on Speculation
Thursday’s session was dominated by talk on the Bear Stearns buyout with members of Congress and Bernanke along with members of the SEC. The talk had little effect on the overall market as the Dow was green on the day. The market also brushed aside jobless claims which jumped 38K last week to 407K.
Holding the market up was a Research in Motion’s earnings report which was better than expected. The ISM Non Manufacturing Idex also surprised analysts as it showed a modest pick-up in March, inching up to 49.6 from 49.3 in February. During the lunch hour, news surfaced that Merrill Lynch was not in need of additional funding which sent shares soaring, contributing to the market’s overall gain.
Another name in the financial sector which saw increased attention during the day was MF Global Ltd. (MF). The Company provides execution and clearing services for exchange-traded and over-the-counter, derivative products, as well as for non-derivative foreign exchange products and securities in the cash market.
On March 17th, the Company was subject to rumor mongers who spread speculation that MF Global and Lehman Brothers were the next in line for a potential bailout and/or takeover. MF responded to the trading action noting that they had sufficient capital, were very well capitalized, and had $1.4 billion in undrawn credit facilities.
On clientele, the Company noted that Joe Lewis, the billionaire who seems to have lost a huge chunk of his investment in Bear Stearns, was not a client of the firm. The Company noted that in fact, client funds were higher on than at the end of February and also noted that clients continued to show strong support.
The response still didn’t stop the Company’s shares from losing over 65% on that day.
On Thursday, the rumor mongers were at it again. But this time, the speculation helped the shares. During mid-day trade, shares began spiking on speculation the Company was soon to be acquired. The stock opened at $10.05 and spiked to highs of $13.29.
The Company noted that they would not address the takeover talk but the Wall Street Journal cited a source that the Company was instead, searching for financing alternatives. After the news, shares plummeted, giving back a majority of their gain before finally closing at $11.31, up 14.47% on the day.
With the speculation and rumors continuing to perpetuate and influence the markets, the financial arena is one with extremely high volatility and risk.
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