Shares of FXCM Inc (NYSE:FXCM) have lost close to 8 percent in Wednesday trading and are changing hands around $1.66 at the time of publication, which is lower by more than 4% when compared to yesterday’s closing price.
After last week, Leucadia revealed its estimates on the value of its investment in FXCM Inc, activist investor VMK Investment Research published a detailed breakdown of the figures.
The report titled “Leucadia’s 10-Q Values FXCM At 89 Cents Per Share, 55% Downside To The Stock” has spurred some reaction amongst the investment community after its publication. In the article VMK Investment Research states that the numbers work out for the $947 value tag put on FXCM Inc (NYSE:FXCM) by Leucadia only if its share price is $0.89.
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At the time of the publication of the report the share price of FXCM was $2.00.
The activist investor disclosed in the article that it was short the equity of FXCM and long on the firm’s convertible notes. The author stated that it was holding no open interest in Leucadia’s stock.
In the article, VMK points to a couple of the key numbers in the 10-Q filing of Leucadia. The carrying value of the investment in FXCM which totals $947 million as of March 31st, 2015 and the highlight that a $0.30 change in the value of FXCM’s shares would result in a change of close to $51 million in the valuation estimate.
Working out the numbers, the researcher states that the maths only works if Leucadia’s estimate is based on a share price for FXCM totaling $0.89.