Shares of FXCM Inc FXCM more than quadrupled in value between December 11 and December 30. The surge was driven by several elements, including the announcement of a $130 million buyback program, the confirmation of its commitment to restructuring its bailout agreement with Leucadia National Corp. LUK and a big insider purchase.
However, on Wednesday afternoon, the stock started to sell off after Sterne Agee CRT analyst Kevin Starke told Benzinga it would be hard to value FXCM over $5, adding that he was unsure of a driving force behind the huge gains and assuring that clients have been trying to cover.
Separately, FXCM’s CEO Dror Niv told Benzinga in an email that the press release put out a few weeks ago was the last relevant news. "Nothing has happened since. I can't explain any of this," he stated.
FXCM Stock Still Available To Borrow
On Thursday, Karl Loomes of SunGard's Astec Analytics shared a look into short-selling activity at FXCM. “Our data would suggest there are still shares available to borrow for FXCM, with utilisation levels (the percentage of available shares being borrowed) in the 40 percent–45 percent range,” he explained.
The expert continued to explicate that borrowing volumes have been surging for roughly two weeks, and the cost of borrowing indicates demand to borrow is robust – currently about 15 percent. However, “none of these things would suggest the market as a whole is finding it difficult to get any shares.”
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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