"This was the biggest arbitrage opportunity I have ever seen in my life. I called my traders and they were shocked by it."
From the London Financial Times...
QXL reverses recent decline
By Caroline Daniel and Thorold Barker - 6 Apr 2000 20:53GMT
QXL, the UK online auction house, led the general dash by investors back into UK technology stocks on Thursday, closing the day 127 per cent higher after hectic trading.
Internet analysts were unable to provide a clear reason for the chunky increase, up 339p at 606p. They cited the 'tech-bounce', QXL's two for one bonus issue and a strong buy note, as well as institutional confidence that QXL was well placed to become the leading pan-European online auction company.
Trading volumes in QXL were far higher than average, traders said, with 17.6m shares traded - the third most active in the FTSE 250. Large numbers of 10,000-15,000 blocks of shares were acquired by institutions, said one analyst.
There were even bigger gains to be made from trading in QXL's Nasdaq-listed shares according to Peter Misek, equity research analyst at Chase H&Q. "This was the biggest arbitrage opportunity I have ever seen in my life. I called my traders and they were shocked by it."
He said the shares in New York opened up 400 per cent at $80, when yesterday it was $24. Yet the shares were trading just 100 per cent higher in London. "You could have bought in London and sold in New York and trebled your money. This lasted for about an hour."
Thomas Bock, an analyst at SG Cowen, a part of SG Securities, set a target price of œ44 in the next 24 months. He said: "QXL is scratching the surface of something that is very big. The pan-European market is two and a half times as big as the US market."
Analysts expected QXL to continue to consolidate the online auction market, following its recent œ313m acquisition of Bidlet. One suggested that the French auction site, iBazaar, which is preparing to float, could be a target.
QXL's performance came against a general rally in technology related stocks. This drove the Techmark 100 index to close up 10 per cent at 4,157. However, this is still below its high of 5,743 earlier this year.
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