Banking & Finance

More Exchange Mergers Coming? (NMX)

NYMEX Holdings, Inc. (NYSE:NMX) has been making another one of its mystery rallies today, as shares traded up to over $129.00 before today’s close.  This one has been thought of in the past as being a buyout candidate, and the prevailing thought is that they “could be” back in play.  The stock volume was actually light until the end of the day, but the stock options trading took a while to catch up in the trading interest today. 

The option premium was not indicative of a super-premium expected, if it was even coming at all.  Recent June highs were in the $140.00+ range, and shares traded as high as $150.01 after opening at $120.00 back on the November 17, 2006 IPO date.  The market cap of NYMEX is almost $11.9 Billion, so not just anyone could be able to acquire this exchange.  Any deal would have to be a friendly merger as well.  There is a conundrum because even if we are skeptical, this one of the potential exchanges that could participate in the global exchange consolidation.  The question is what price an acquirer would pay.  Based on today’s options trading and prices, that premium does not look as though it is expected to be huge. 

This is a very abbreviated version of what we sent to free email subscribers during trading hours today.  We are currently reviewing several key corporate developments for subscribers of our Special Situation Investing Newsletter.  Trials are available and can be signed up for. We are currently reviewing some financial picks, we have a security play that has a transport angle under review, and we even have under a company in the death and elderly care under review.  Lastly, the NCR tax free spin-off of Teradata is also being reviewed for the paid newsletter.  Which of these will be the next newsletter? We’ll know any day now.

If you want to see samples of our work that we have now made available for public view, here are some resent examples of our subscriber-based Special Situation Investing Newsletter.  We called for a pullback in EMC shares right at the VMware IPO and compared it to other key spin-offs in recent history.   We also outlined for paid subscribers what was an industry sea change that was a essentially nothing short of a reverse merger in the stock photo industry that was creating a black hole scenario for Getty Images (GYI).  We gave the scenario where we called for Getty to fall from around $50.00 to under $40.00, and this panned out much faster than we initially would have expected.  The stock trade would have netted out a greater than 30% return on the recommendation, and the options trade alone would have been well over a 100% profit for readers that followed this advice.

Jon C. Ogg
September 10, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.