Wednesday, August 03, 2005

NYSE seat fetches $3mm today; Sets all-time record!

Today a NYSE seat was sold for a record $3mm -- breaking a six-year record, and marking an 85% increase in seat value since the deal of the century was announced on 4/20/2005.

Given this all-time record value of a NYSE seat, thought it'd be fun to reflect on some of the follies that have gone down since that magical day in April. Let's start with Ken "longone" Langone.

This grouchy curmudgeon has been pretty quiet lately. To be sure, his protest impacted AX in the short-run, but sure enough, the weighing machine has prevailed in the long run as today's sale and Arca's share price reflects. Each day that Q1 2006 nears, it is becoming clearer that this deal will not only go through, but be awesome for NYX seat/shareholders.

Next up, Charlotte Chamberlain from Jeffries. Look through the archives here at ArcaNews to gain some insight to her pathetic trading calls. You may recall, on 4/22/2005 she pontificated about why Arca would underperform. AX closed at $29 and change that day. Even better was her call on 11/11/20o04. On that day, while Putnam and his team were creating methods to enhance shareholder value, she downgraded the stock. AX closed at $18 that day. Why Jeffries wants to damage their credibility by letting Chamberlain publish anything related to electronic financial services is beyond me.

And who can forget Sandler O'Neil's Rich Reppetto. On 4/22/2005 he downgraded AX to an unusual "sell." O'Neil's customers who took his advice and shorted the stock are probably still licking their wounds. The stock closed at $29 and change that day.

Then there's Fane Lozman's ridiculous law suit. Lozman was a business partner of Jerry Putnam's back in 1995. Things didn't work out and Mr. Putnam went his own way - and has done fairly well. Lozman is yet another example of sour grapes becoming litigious.

Speaking of being litigious, William Higgins has been pretty quiet lately, too. His beef with NYX is that the deal is not fair for NYSE seat holders. Today's deal should pretty much quail this ridiculous notion. If the deal were not good for seat holders, then why does the value of their seats hit an all-time record today? And why is the value today 85% higher than it was prior to the merger announcement?

There will always be nay-sayers, but that's what makes markets. Thing is these boneheaded perspectives are not only way off the mark, but there's enough history and facts now to really damage the aforementioned folks' credibility.

The Financial Times and other rags like the WSJ have certainly tried to cast a shadow of doubt that this deal will go through. They've published articles stating that the SEC is looking at the merger closely. Surprise, surprise! The deal only represents the future structure of the US equity markets.

If analysts (and their sponsors/employers) could be downgraded, it seems that Chamberlain/Jeffries and Repetto/Sandler O'Neil are "Strong Sells." Thing is a downgrade implies a once bullish (or neutral) stance. Not sure any of the folks cited in this posting have ever had value -- save for being incredible contrarian indicators.

As I've said before. A 7-year old can be as right as the folks that are part of this rant. When you are wrong you are wrong. And today's record NYSE seat sale is a good reminder of just how wrong these clowns were!


Anonymous TechTrader said...

Interesting blog. I'd be interested to hear where you think Arca goes from here. Why would you start a blog touting a company that has been acquired by the NYSE? And they're not even public.
Otherwise, interesting stuff.

12:55 PM  
Blogger amotleyfool said...

Techtrader -
Thanks for comments. Let me take your questions one-by-one.

Where do I think Arca goes from here?

I think Arca leverages tremendous synergies with the NYSE to create a unique marketplace where specialists work illiquid names and the ArcaEx facilitates lightning-fast execution at incredible prices for investors. With Arca, the NYSE will host a marketplace for the trading of deriviatives, computer processing power, and bonds (to name a few things).

NYX will take market and mind share from CME, the NY Merc, Nasdaq, ISE, MKTX, and others. Revenue will grow tremendously as NYX gets into these markets, and start priming the pump on market data feeds -- feeds that thus far have not generated any significant revenue.

Margins will expand, and economies-of-scale will turbo-charge a for-profit NYX.

Why would I start a blog touting a comopany that has bene acquired by the NYSE?

This blog was started during the beginning of November of 2004 -- long before any news of a merger with the Big Board was in the works. I encourage you to look back through the archives to get a sense of why I've always been bullish on AX.

Hope this answers your questions. And, again, thank you for stopping by!

8:02 PM  

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