One overlooked event that IMHO accounted for the Friday sell-off was the release of an analyst report from Merrill Lynch, issued by their popular analyst Judah Kraushaar on Thursday, July 8th. His report was decidedly bearish, reflecting much of the concerns expressed in my earlier post on this stock. Essentially, he points out that some 33.71m shares (30.4% of outstanding shares) and 32.94m (29.7%) shares owned by executives/directors and broker dealer owners respectively become available for release from their lock-up agreement on July 13th (Tuesday). He is concerned that with the whopping 60% of outstanding shares becoming available, "For the broker dealer owners, we do not expect a massive selling of shares; however, we cannot rule out the possibility of some lightening up of positions."
In conclusion he says: "While we would accumulate particularly on price weakness, we are still mindful that Knight's valuation currently is not compellingly inexpensive."
For those who've followed his recent, decidedly upbeat write-ups on NITE, the last comment was definitely very bearish, and may well have triggered this sell-off, what with Yahoo also feeling the bearish signal from the issue of their recent quarterly results.
At this point, it seems safer to hang in the sidelines, let at least a week after July 13th pass safely to avoid the turbulence from this major event, as well as their upcoming quarterly earnings announcement on July 21st before investing in them.
BTW, does anyone have an opinion on the impact on NITE's business arising from the planned IPO's of several market makers of stock options, indexes and treasuries...they all 'smelt' like potential competition to NITE!
Good luck to everyone for an interesting fortnight ahead! |
