FXCM shares dip back below $2 as shareholders change over from institutional to retail

The first quarter of 2015 will not be remembered fondly by both shareholders and employees of FXCM Inc (NYSE:FXCM), as the Swiss Franc spike of January 15 nearly put the company out of business. FXCM was saved by a $300 million lifeline loan extended by Leucadia National Corp. (NYSE:LUK), which also greatly diluted the effective ownership of FXCM.

FXCM shares dropped from the mid to high teens range in early January to trade in the low to mid $2 range post January 15.

But Q2 hasn’t started off that hot either.

While holding fairly steady in the low to mid $2 range since then, FXCM shares have started to slip, and closed below the psychological-barrier $2 level on Friday for the first time since late February.

What’s going on?FXCM share price May 1


FXCM share price past three months. Source: Google Finance.

A Wall Street source we spoke to indicated that he believed that the company’s shareholder base has changed. Most institutional owners have decided to take their losses and get out over the past three months, seeing little upside in FXCM due to the Leucadia deal even if things do go operationally well for FXCM – which they seem to be, FXCM reported fairly healthy trading volumes for March.

But retail traders (whom FXCM serves in its business) took up the slack, at least initially.

The ‘retail traders’ who took the institutions’ places as owners of FXCM were initially somewhat bullish on FXCM’s prospects – seeing the mid $2 price tag for a company that recently traded at $17 as a bargain – but might be losing patience as the shares aren’t really moving anywhere.

Will traders continue to view a sub $2 share price for FXCM as a bargain, and bid the shares back up?

Stay tuned to LeapRate as we continue to follow this story…

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