The markets hated MF Global (MF) before it went public, And Wall St. hates it more now.
Putting a derivatives broker IPO into a market that is running from derivatives won’t get the company or the underwriters the annual Albert Einstein Genius Award.
So, the shares were to go out at $36. That was cut to $30. And, today the stock trades at $26.20.
The FT gives a good reason for why the pricing was flawed from the start. "At the upper end, $39, the implied 2007 price/earnings multiple of 30 times put MF’s rating closer to that of futures exchanges. MF faces a more competitive environment than the latter." A rational market took that down, and an irrational market is taking it down further.
Perhaps the most important point about the IPO is that Man Group, the hedge fund based in the UK, that was spinning off part of its ownership in MF could have waited. It did not need the money for operating expenses.
Instead, a group of investors lost some real cash.
Douglas A. McIntyre
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