This year hasn't been kind to derivatives broker and Global Gains pick MF Global
In MF Global's situation, the EPS number alone isn't very telling -- these are extraordinary circumstances. (In case you're wondering, earnings per share did come in ahead of the consensus estimate.) To verify that MF is stabilizing its franchise, you've got to look at client balances, trading volume, and other operational metrics, too.
Short-term funding is a slippery slope
MF has wisely decreased its dependency on short-term funding, thus avoiding a weakness that ultimately sent Bear Stearns into the arms of JPMorgan Chase
Solid volume growth at exchange operators such as CME Group
I don't blame MF Global for hiring a trader who ultimately went rogue; that can happen at any firm. But I do blame it for lacking the culture and processes necessary to ferret this character out before he did substantial damage to the firm's reputation.
When cheap isn't cheap enough
At less than six times FY2010 estimated earnings, MF Global looks cheap, especially if it achieves its estimated five-year earnings-per-share growth rate of 16%. Nevertheless, it's a turnaround situation, with all the risks that entails. As a risk-averse investor, even if the shares were outrageously cheap, I simply couldn't get excited about the idea of buying them -- especially in a market in which some truly outstanding businesses are selling for less than intrinsic value.