KCG down due to rumor of algo gone wild

Quote from jj90:

Quick and dirty balance sheet analysis here:

I got Cash: 555M
AR: 888M

For current assets: 1443M

AP: 721M
ST Debt : 646M (ex out GNMA trust as that is netted by HECM inv a LT asset)

For current liabilities : 1367M

For CA- CL = 76M surplus
Inv not included, liquidation means end of Knight

If we take 440M loss straight to cash, we have 115M in cash still.

The credit facilities has a negligible interest exp monthly, the 3.75% notes has a payout of roughly 6.56M on Sept 15. Assume the lease obligation is paid EOY take out another 24.2M. It seems that Knight should be liquid here. I don't know what the min cap requirement is though and it looks like that is the variable at play.

Please knock a hole in this, as I'm short AUG vol and need to see the bear case.
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Payable to brokers, dealers and clearing organizations $438,103(Millions)
http://www.zerohedge.com/news/scary-scary-knight-prime-brokers-start-pulling-cash
 
The bear case comes from many angles, not just the balance sheet.

1. This morning they said they need capital.

2. Look at how the bond is trading
http://cxa.gtm.idmanagedsolutions.com/finra/bondcenter/BondDetail.aspx?ID=NDk5MDA1QUU2

3. Customers may reduce amount of business with the firm, or just leave them altogether, and pull cash. See also number 5 below.
http://www.zerohedge.com/news/scary-scary-knight-prime-brokers-start-pulling-cash

4. Some brokerages are not routing to NITE, others may follow.
http://www.zerohedge.com/news/scary-scary-knight-prime-brokers-start-pulling-cash

5. Lenders may pull credit lines; creditors may demand payment; suppliers may ask for payment upfront.

6. Employees may resign, especially if they fear losing their entitlements in bankruptcy.

7. Potential buyers may wait for bankruptcy to buy part or the whole company.
http://www.zerohedge.com/news/white...ht-wsj-reports-potential-bailout-merger-works

8. Although it's not the same as MF Global, there are many similarities ("oh it might be bought by private equity"). Then they announced Chapter 11.


Quote from jj90:


Please knock a hole in this, as I'm short AUG vol and need to see the bear case.
More...
 
Quote from wilburbear:

Respectfully disagree. They're all wonderful people at Knight until they owe you money.

I'm a plaintiff against Knight in an unrelated matter, they tried every trick in the book to stall discovery in a case, some of which would provide monies to the aggrieved public, and not just broker-dealers, and their posture was uniformly one of malfeasance. It's free to put on a benign face.

I've seen Knight with the mask off. As a plaintiff (and not in some diluted class action), I might recover money from Knight if they survived. And I hope they don't make it!
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just went to Knight's website.

all caps on the front page "the standard of trust".

like i wrote above, if they owe you money, you're suddenly dealing with the mafia
 
Quote from jj90:

Quick and dirty balance sheet analysis here:

I got Cash: 555M
AR: 888M

For current assets: 1443M

AP: 721M
ST Debt : 646M (ex out GNMA trust as that is netted by HECM inv a LT asset)

For current liabilities : 1367M

For CA- CL = 76M surplus
Inv not included, liquidation means end of Knight

If we take 440M loss straight to cash, we have 115M in cash still.

The credit facilities has a negligible interest exp monthly, the 3.75% notes has a payout of roughly 6.56M on Sept 15. Assume the lease obligation is paid EOY take out another 24.2M. It seems that Knight should be liquid here. I don't know what the min cap requirement is though and it looks like that is the variable at play.

Please knock a hole in this, as I'm short AUG vol and need to see the bear case.
More...

Where did you get this data?Its not matching google finance, current liabilities much higher there. or even yahoo finance for that matter
 
I'm just in this thread to hear the technical horror story and can't wait until the details leak. Programmers make mistakes all the time and mistakes cost money. That part is not new. I just don't see how someone in operations could've missed something so extreme and for so many minutes.

Anyone know the story?
 
Data from their last quarterly report, out not very long ago. I looked @ goog finance but it didnt have the breakdowns of the balance sheet and more importantly, note to the financial statements. Noted with regard to the operational risk, but as I really only care up to AUG17, I'd like to know if anyone is looking at this from a liquidity POV.
 
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