FXCM stock discussion

M

m22au

There are multiple threads about CHF and FX brokers, but I started this thread for a specific discussion about FXCM stock:
finance.yahoo.com/quotes/fxcm

Link to press release about $300 million loan:
http://ir.fxcm.com/releasedetail.cfm?ReleaseID=891752

"Leucadia National Corporation (NYSE: LUK) and FXCM (NYSE: FXCM) today announced that Leucadia would be providing $300 million in cash to FXCM and its subsidiaries (collectively "FXCM") that will permit FXCM to meet its regulatory-capital requirements and continue normal operations after yesterday's loss of $225 million due to the unprecedented actions of the Swiss National Bank.

"Under the terms of the agreements, Leucadia is investing $300 million in cash into FXCM in the form of a $300 million senior secured term loan with a two-year maturity and an initial coupon of 10%. The term loan obligations are guaranteed, on a secured basis, by certain of FXCM's domestic subsidiaries.

"In addition, Leucadia will receive, in the event of a sale of FXCM or its subsidiaries, a certain percentage of the sale proceeds and, in the event FXCM makes other distributions on account of its equity, a corresponding payment for its own account. This transaction is expected to close this afternoon."

The key term that is missing is what percentage Leucadia will get upon the sale of the company.
However press reports suggest this will be 75%.

SEC filings for FXCM:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001499912&owner=exclude&count=40

Still waiting on a SEC filing to show the details for the loan agreement.

Friday after hours trading saw the stock trade mostly between $3.60 and $4.90:
http://www.nasdaq.com/symbol/fxcm/after-hours

Any thoughts on where FXCM should trade on Tuesday?

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I bought some AH at 3.80 sold 20% at 4.65, holding the rest for the Tuesday morning pump through 5. Will scale out accordingly and use 5 as a stop.....Or will cover the rest at break even if it doesn't go up as expected.
 
I bought some AH at 4,44. Didn't think the stock would resume trading in the AH and got the tip from a fellow trader on ET (thanks), so I got into the trade very late.

I expect the stock to make a big jump on Tuesday and to recover to at least 9 USD in the next week. Since 2010 it has never traded below 9 USD, so this is the bare minimum. Once it's at 9, I'll move my SL to 5,00 and continue holding the stock until 15 USD, the middle of the last months' range. It could take the stock a couple of months to reach that point, but I think it can. I'll go out before if I see the 9,00 barrier not holding.

Good luck to us :)
 
SwingToWin said:
I bought some AH at 4,44. Didn't think the stock would resume trading in the AH and got the tip from a fellow trader on ET (thanks), so I got into the trade very late.

I expect the stock to make a big jump on Tuesday and to recover to at least 9 USD in the next week. Since 2010 it has never traded below 9 USD, so this is the bare minimum. Once it's at 9, I'll move my SL to 5,00 and continue holding the stock until 15 USD, the middle of the last months' range. It could take the stock a couple of months to reach that point, but I think it can. I'll go out before if I see the 9,00 barrier not holding.
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The $300 million loan at 10% interest means an additional $30 million of interest expense each year. Compare this to full year 2013 income before taxes of $51.8 million. 2014 income before taxes for the first 9 months of 2014 was negative.

A return to a stock price above $10 seems highly optimistic, especially since the stock was at $14.87 at Tuesday's close, after it released poor monthly customer activity metrics for December 2014.


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m22au said:
The $300 million loan at 10% interest means an additional $30 million of interest expense each year. Compare this to full year 2013 income before taxes of $51.8 million. 2014 income before taxes for the first 9 months of 2014 was negative.

A return to a stock price above $10 seems highly optimistic, especially since the stock was at $14.87 at Tuesday's close, after it released poor monthly customer activity metrics for December 2014.


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My guess is that YoY revs will be down 35-40% from Jan15 to Jan16. There is no way that they can remain independent. I don't think they will last the year.
 
Slight error in my previous post: FXCM stock closed at $14.87 on Wednesday (not Tuesday) 14 January 2015.

Further to destriero's post above, they would have seen a lot of customer withdrawals on Friday. No doubt more withdrawals coming next week, even despite the $300 million loan.

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Stock Analysts were Downgrading FXCM before the Trade Halt was lifted, why not make this call on Monday, Tuesday, Wed or on Thursday, that was the day the Swiss made their move right? It still was above $10.00 if my math is right on Thursday Jan 15th. One guy downgraded it to $4.00, they be lucky to get $2.00 if there is any value left. I think the creditors throwing it a lifeline might decide to wipe out stakeholders because there's not much choice here. Saw this with Refco and what about old John Corzine's company and many others over the decades as they blow up. Do you ever wonder why these guys get paid to downgrade a stock once it's worthless, we all could have made these calls on when news hit of their massive liquidity or insolvency issues. Go Figure!

http://www.streetinsider.com/Analyst Comments/Credit Suisse Downgrades FXCM Inc (FXCM) Two-Notches to Underperform/10170629.html
 
This situation is more comparable to KCG rather than Refco. With Refco, there was no bailout from LUK, and so Refco went bankrupt.

Although FXCM is still in trouble, it's not terminal because of the $300 million loan.

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Anything at the right price. Even if they lose some customers, there will still be a sucker born every minute and retail forex trading is a great way to take their money. I don't think that's going to change any time soon.
 
your fundamental outlook is logical and understandable. the problem is however, that the stockmarket itself is not logical and not understandable. therefore I guess we will see the price in the 9-17 USD range in the next weeks again :)
 
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