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BGC Partners Shares Popped: What You Need to Know

By Anders Bylund | More Articles
June 9, 2011 | Comments (1)

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of financial services broker BGC Partners (Nasdaq: BGCP  ) made you anything but broker today, launching as high as 10.4% on a sudden late-lunch spike of heavy volume.

So what: CEO Howard Lutnick made an appearance on CNBC's Fast Money just before that spike. Investors clearly ate that appearance up.

Now what: Lutnick used that airtime to argue that small financial firms like BGC are positioned to beat larger rivals because of a lower exposure to risky assets like mortgage-backed securities and risky loans. He also aimed a spotlight at his 9% dividend, which is about twice the yield offered by closest competitor GFI Group (Nasdaq: GFIG  ) . The CNBC spot didn't unveil any new news, but it's amazing what a little face time with investors can do for a relatively unknown small cap like BGC.

Interested in more info on BGC Partners? Add it to your watchlist.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.


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  • Report this Comment On June 10, 2011, at 6:11 AM, rsinj wrote:

    What Lutnick failed to mention - that fat dividend is a farce because it is not sustainable out of earnings. A good portion of it is being paid out of cash on the books.

    What Lutnick also failed to mention - his firm has just taken the first step in a very high-risk maneuver acquiring Newmark Knight Frank - a real estate brokerage because he thinks they can use their trading platform in the real estate world.

    Hey - commercial real estate is just another derivative product that we can trade - right? I think that this risky pet project is going to fail royally. When a company goes off in a direction totally different from their bread and butter it's time to become very skeptical about what is happening.

    The stock will be even lower than where it was before the CNBC appearance - it has to be as the traders and followers will be looking to move on.

    I'm also suspect of anything Lutnick says because of his ownership of BGCP - I can't even discern how he came into his 10 million shares ownership.

    Make no mistake - Lutnick is a nice guy and has a good amount of respect from Wall St. from the history with Cantor and eSpeed, however, I don't like the direction he's heading on this one.

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Related Tickers

5/25/2012 4:00 PM
BGCP $6.21 Up +0.02 +0.32%
BGC Partners, Inc. CAPS Rating: ****

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