Gary, Well-written commentary. Good point about now Merrill has incentive to route business to NITE whenever possible because of order flow "kickbacks." I hadn't thought that far ahead, but you certainly have a point.
Your stuff is as good or better than that which is put out by the analysts, so why not fax Merrill's covering analyst a copy since you're a Merrill client. You might give him some ideas he hasn't thought of yet.
As to the market's response to the Merrill announcement, I think Thursday's move was commensurate with the news. After all, NITE jumped 20% on a blowout record volume day.
I would think Pasternak would agree about yesterday's surge in price privately. But publicly, as we heard, he seems to be very reticent to hype his stock - he's a smart man.
Today, IMO, NITE was hit by two or three factors (Greenspan's mention of stock market wealth effect, the Lehman downgrades for AMTD, EGRP, and profit taking) that are peripheral to NITE's forward prospects and provided a great buying oppty. In fact, I view most talk about OLB competition as a plus for NITE. That's one of the classic misperceptions of this recent share decline for NITE.
I agree with you that NITE's share value is not properly discounting the full agenda it has ahead of it. So much for "efficient market theory!" There have been enough counter-examples of "efficient markets" in my recollection that I no longer believe in the concept. |
