Internet rush makes broker "Mickey" a billionaire
By Jack Reerink
NEW YORK, Feb 3 (Reuters) - The love-affair with Internet
stocks made the first female member of the New York Stock
Exchange a billionaire on Wednesday, as investors pushed up
stocks of obscure brokers that funnel trades through
cyberspace, or even those that just plan to do so.
Muriel "Mickey" Siebert, who became the first woman to join
the New York Stock Exchange in 1967, saw the value of her
95-percent stake in tiny New York brokerage Siebert Financial
Corp. almost double to $1 billion, as investors
battled to scoop up the few shares available to the public.
Siebert, known as "Mickey" on Wall Street, is the third
brokerage executive to become a billionaire thanks to the stock
market's passion for any company remotely connected to the Web.
The rise in Siebert shares and those of other tiny
brokerages followed similar out-sized gains in the stock
prices of leading Internet brokerages E*Trade Group Inc.
and AmeriTrade Holding Corp. .
AmeriTrade's long-time chief executive, Joe Ricketts, owns
about half of the company, making him worth around $2 billion
at current share prices. Charles Schwab, founder and chairman
of the nation's largest discount and Internet brokerage that
bears his name, holds stock worth about $6 billion.
"When you see the run-up that has taken place in AmeriTrade
and E*Trade; (investors) hop onto the bandwagon and hope to
catch the next wave," said analyst Michael Chung of Williams
Capital Group. He noted that these obscure companies "have few
shares outstanding, so people piling in is going to drive up
their stock prices."
Indeed, Siebert's public float -- or shares available for
trading -- is just 794,000 shares. But investors traded more
than 10 million Siebert shares on Wednesday, meaning every
share changed hands about 13 times on average. The stock's
price almost doubled to close at $49.50, from $26, after it hit
a record high of $52.25 earlier in the session.
The craze is partly driven by a surge in Internet trading.
Stock investors channeled a record 340,000 trades a day through
the Internet in the fourth quarter, up 38 percent from the
third quarter, and trading volumes in January are rising at the
same clip, according to industry reports. The ever-growing
volumes have pushed up AmeriTrade and E*Trade's share prices
more than tenfold in the last four months.
Siebert, which has seen its stock price increase eightfold
in little over six weeks, recently raised capital to start an
Internet brokerage service, and a week ago introduced an
interactive pager called Siebert MobileBroker. Siebert and
other executives did not return phone calls inquiring how many
users the firm's Internet or MobileBroker businesses have, if
any.
Siebert reported a $3.2 million profit on revenues of $19.0
million in the nine months ended September 30, the latest
available financial figures for the firm.
A similar-sized firm, M.H. Meyerson & Co. Inc. of
Jersey City, N.J., also saw its stock lifted by investors'
rushing to buy into the promise of Internet brokerage. The
company, which posted an $841,000 loss on revenues of $22.4
million in the nine months ended Oct. 31, said on Tuesday it
would offer online trading, albeit no earlier than in the
latter part of the year.
Investors promptly pushed up the firm's share price more
than 100 percent to $9.13 Wednesday morning. The stock closed
at $7.44, up $3.25.
"They're running in sympathy with E*Trade and AmeriTrade,
although I think they are not on the same level," Chung said.
"The scary part is when people realize (these smaller brokers)
are not like an E*Trade and they want to get out, these stocks
are going to be marked down fast."
Another little-known broker, JB Oxford Holdings Inc.,
which said it would close its Boston office to cut
costs, almost tripled to $12 from $4.75 Tuesday, and National
Discount Brokers Group Inc. added $11.06 to a record
$37.63. Regional broker Southwest Securities Group Inc.,
which has a tiny Internet brokerage unit with just
3,000 accounts, rose 18 percent to a record $40.68.
Of the big Internet brokerages, AmeriTrade rose $18.25 to
a record $128.56, but E*Trade slipped $3 to $55.25 after a
system failure prevented customers from trading stocks. Charles
Schwab Corp. , which has 2.2 million online accounts,
shed 63 cents to $68.
((--Jack Reerink/Wall Street Desk (212) 859-1725--))
REUTERS
================================================================
Subjects: FIN US BNK ELI RET US HOT
Symbols: SIEB EGRP AMTD MHMY JBOH NDB SWS SCH
|
