Previously, FXCM was touted by Steve Eisman as his only stock pick at the Grant's Interest Rate Conference. However, Eisman did not mention FXCM during his presentation at the Ira Sohn conference.
Citadel disclosed a 5.7% stake in FXCM with a 1 million share position. Ken Griffin most likely purchased the shares around $9. After the news of his purchase hit the news wires, FXCM stock rocketed up 7%.
Ken Grififn previously owned 135K shares of FXCM at the end of December. However, Griffin sold the shares in the first quarter at around $13/share.
FXCM has been battered by over 30% in the last two weeks after the company reported earnings that fell short of expectations. In FXCM’s first-quarter, trading volume jumped 11% to $822 million but daily average revenue trades fell 1.4%. The firm’s revenue rose 23% to $94.6 million.
After this huge selloff, Griffin stepped up and repurchased his shares and then some. He actually increased his position by 800% over his initial stake.
FXCM is a value stock that trades at less than 8X 2012 earnings. The company also sports a 2.7% dividend yield.
However, there are concerns that the business model could be in the cross hairs of regulators. The L.A. Times recently published a story critical of amateur currency trading due to the immense leverage and losses that speculators are suffering from.
"These customers are losing money in spectacular fashion.
At FXCM, 75% to 77% of customers lost money each quarter last year, according to newly required disclosures to the Commodity Futures Trading Commission. At Gain, which operates through http://www.forex.com, the number of unprofitable customers hovered between 72% and 79% every quarter last year, according to its filing."
The concern is that regulators will eventually put an end to amateur currency trading or severely restrict access to forex platforms such as FXCM.