Here come the hedge funds!
Apparently Citadel held a smaller position (135,000 shares) as of December 31, but sold them all in Q1 when FXCM’s shares traded in the $12-14 range (after FXCM went public in an IPO at $14 per share in early December). Citadel has since repurchased an even larger position as FXCM’s shares dipped below $9 in recent weeks, following the release of Q1 results – on the day FXCM’s Q1 results were released (May 16), its stock sunk by 17%, and rival Gain Capital’s share price dove by 6%.
Citadel is quite familiar with the online brokerage business, having led a $2.5 billion investment in E*Trade in November 2007. It has since sold a good part of that investment. (Note that it is difficult to assess how Citadel has done on its E*Trade investment, which apparently helped E*Trade stave off bankruptcy nearly four years ago. E*Trade’s share price is well below where the investment was made, down by about two-thirds, but the transaction also included Citadel buying a troubled $3 billion asset-backed loan portfolio from E*Trade for $800 million in cash.)