Speculation and loud whispers continue to surround the fate of MF Global after it was revealed yesterday that the company had hired two banks to consider a sale of the whole company or parts of it.
Earlier today, Bloomberg TV reported that the firm will sell off its futures unit within days. Bear in mind that MF Global is a derivatives brokerage very well known for its futures and commodities trading – so when it sells off its futures unit, that just sounds like it’s selling the whole company.
Fitch has also just weighed in: the company’s long-term debt just got cut to junk status.
Just as highly publicized as the firm’s tumbling stock value is what this will mean for MF Global CEO Jon Corzine’s reputation. Corzine is a former Goldman Sachs CEO and wanted to make MF Global into a “mini-Goldman Sachs” when he joined. Needless to say, he hasn’t succeeded, and now all Wall Street eyes are on him.
The stock has fallen 63% in the last five days of trading. Today, share prices are see-sawing, it’s trading at $1.53 right now, down 10%.
The company’s stock started sinking Tuesday, after Moody’s downgraded their debt to one level above junk status and their quarterly earnings report revealed falling revenue and high exposure to European debt. (FYI: share prices for the company aren’t doing too hot today either despite the announcement of the deal in Europe.)
On Wednesday, the Wall Street Journal broke the news that Evercore Partners had been brought on to advise the distressed company. Today, the New York Post reported that J.P. Morgan is the other bank.
This morning, Dick Bove from Rochdale Securities weighed in on the issue on BloombergTV’s Inside Track, and said that he thought the hysteria surrounding MF Global was highly overblown. The weak economy and uncertain market conditions has made it so that every piece of bad news that befalls a financial firm becomes magnified, Bove said.
He also offered up the best company to buy MF Global: Goldman Sachs. He said Goldman stands to gain a “tremendous windfall profit” if they buy MF Global’s assets at its distressed levels right now, hold them on their books and make a profit later. He cited Citigroup and other Canadian banks as possbilities too.
Over at Fortune, contributor Cyrus Sanati also laid out all the possibilities for MF Global. He makes the case for all the options, from a private equity buy-out to an injection of foreign funds to a merger with a smaller brokerage firm.
Here’s a video of Bove discussing MF Global on Inside Track: