We all knew it was not going to be pretty, but seeing it in print was still, well, ugly. Final tally for the day?
$1.60, -$11.03 (-87.33%).
FXCM Inc (NYSE:FXCM) ended its first day of trading following the lifeline loan made by Leucadia, with its shares down more than 87% from where they closed Thursday, before the extent of FXCM’s problems in the wake of the Swiss Franc spike became known.
FXCM Tuesday trading. Source: Google Finance.
Although FXCM shares varied greatly in value during the Tuesday morning pre-market trading session, once ‘real’ trading began they varied surprisingly little in value around the $1.50 level, eventually closing at $1.60. More than 94 million FXCM shares changed hands, versus an average of just 1 million shares daily. At $1.60 a share, FXCM now has a market value of about $131 million.
So what does this mean?
Well, it seems as though investors believe that there simply isn’t much upside to FXCM beyond what Leucadia essentially acquired via its loan. At $1.60 a share, FXCM shares are in our view being treated as a call option on the possibility of a good exit in the form of an eventual sale of the company, at a price which gives shareholders some upside. In a sale of FXCM, Leucadia is basically entitled to get its $300 million loan back in full, plus 50% or more of proceeds beyond that.