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BGC Partners, Inc. Message Board

  • deanmortensen deanmortensen Apr 3, 2013 3:59 PM Flag

    Irrational Pricing of BGCP stock...

    BGC Partners is selling its e-Speed electronic Treasury trading platform to Nasdaq OMX Group for $1.234 billion, which includes a $750 million cash upfront payment. Today BGCP stock is trading at $5.51, and there are 164.08 million shares of stock outstanding. The equity capitalization (ie, the market value of all the outstanding stock) of BGC Partners is $904 million, which is less than the sale price of the e-Speed Treasury trading platform. In fact, since $750 million of the sale price is in cash, the equity capitalizatiion of BGC Partners only exceeds the cash portion by $154 million. That's crazy! This is a company that pays out a 48 cents per share annual dividend. It produces prodigious free cashflow. Yet, the market still pegs the enterprise value of the company at less than the sale price of the e-Speed platform. Crazy!

    Sentiment: Strong Buy

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    • Incredible you guys keep saying that the deal only benefited the common share holder... Look guys, the common share holder only owns half the company, the other half belong to Limited partnership interests in BGC Holdings, so that an extra 142 million shares.

      • 1 Reply to mario_luis_gomes
      • mario, you are 100% correct. Thanks for pointing out that the fully diluted share count is actually 302 million shares, a fact CEO Lutnick stated on the conference call to discuss the deal to sell e-Speed. So, on a fully diluted basis, if you take the $1.234 billion sale price, and divide it by 302 million fully diluted shares, the result is: $4.08 per share. Put another way, BGC Partners is selling a piece of its electronic brokerage business which generated 6% of revenue and perhaps 25% of earnings last year for a king's ransom which equates to $4.08 per fully diluted share.

        Sentiment: Strong Buy

    • I am impressed " prodigious " great word, Joey better get a dictionary to read these posts!

      I cannot figure it out either, it could be the fear of deal not going through or people not fully understanding what happened.

      Either way the divy is now safe pretty much forever especially with mngt owning so many shares and wanting the divy. This give the the needed $$ to also grow the re platform which will easily add back the income form the sale of eSpeed.

      Good luck


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