Knight Capital

  • 22 Oct 2013 at 11:50 AM

Layoff Watch ’13: Knight Capital Group

Cut are said to have gone down at the kingdom. Read more »

  • 03 Jul 2013 at 11:03 AM

Knight Capital CEO Is Going To Take Off Now

“Over the course of the last eleven years, I have been fortunate to be the CEO of Knight Capital Group. Together we achieved a wide variety of the business goals we had established. With the transaction with GETCO completed, and after careful consideration, I have decided that now is the right time for me to resign as Executive Chairman and leave the organization…I take great pride in the fact that “legacy Knight” is operating so well as it moves into KCG Holdings. And I am gratified that the values at the core of Knight’s DNA – client service, integrity and maintaining the highest standard of business ethics – will continue to be core values of KCG going forward. Our business success is dependent upon relationships built on trust, and it is due to the committed and hardworking employees of Knight that our company has been successful through the years. Similarly, it has been an honor to work closely with Knight’s clients…All the best, Tom Joyce.” [BI]

This lawsuit is mostly about the (alleged!) unapologetic Antisemitism of Knight Capital managing director Brendan Joseph McCarthy, which former employee and plaintiff Robert Morris Milloul claims caused him and others to lose their jobs in the algorithmic trading unit of the firm; we don’t need to summarize the allegations but we did think it was important to highlight the motivational technique he was said to use around the office. Read more »

I give you a tiny puzzle. Getco offered to buy Knight Capital a month ago for $3.50 a share, in the form of a cash-stock-election structure complicated by the fact that Getco is not (yet) a public company and so the value of your stock election is a bit of a mystery. Today the Knight board accepted Getco’s revised offer, which is similar but provides $3.75 per share, so I guess the mystery has been cleared up to its satisfaction; there will eventually be a merger proxy/prospectus so soon it will be cleared up to everyone’s satisfaction or possibly dissatisfaction.

The puzzle: if Getco is increasing the cash paid for Knight shares by 25 cents, or 7.1%, then it should also increase the value of the share election by 7.1%, to keep things in balance. And in fact it seems to have done so: while the original offer said that the tangible book value per share of newco would be $3.50, the revised one says: Read more »

With Knight Capital Group’s days as an independent entity waning, the Jersey City brokerage’s employees are preparing for the future, so sayeth Charles Gasparino. Read more »

  • 28 Nov 2012 at 1:28 PM

Knight Rides Again, Maybe

I’m a sucker for a little puzzle and I guess this Knight-Getco-Virtu thing qualifies, so let’s just bop around doing some silly arithmetic about it. Knight, the trading firm that slow-burn blew itself up this year, is looking for buyers, and Getco and Virtu seem to be those buyers. On the table we have:

  • An offer from Getco to buy half of Knight’s shares for $3.50 in cash and leave the other half outstanding in a new merged Knight-Getco, and
  • A rumor of an offer from Virtu to buy all of Knight’s shares for $3.00 in cash.

Virtu’s deal is worth $3.00, I guess. Getco’s deal is more complicated, but it’s got to be worth … at least $1.75, no? Plus whatever a (half of a) share in the new company is worth. What is that? Well it’s a proportionate amount of

  • Whatever Knight is worth, plus
  • Whatever Getco is worth, minus
  • The cash that is paid out to cash out half of the shares, all divided by
  • The number of shares in newco.

Plus synergies, etc., which are probably a thing. Rapacious prop traders + naive retail order flow = synergies!

Anyway you can start on the Getco deal’s value by mathing out tangible book value numbers. Read more »

  • 31 Oct 2012 at 1:26 PM

Knight Capital Having Difficulty Catching A Break

Knight Capital is experiencing “power issues” and told clients to trade equities elsewhere, according to a memo from the company. No new orders are being accepted, said the Jersey City, New Jersey-based company, which almost went bankrupt in August after a computer error flooded the market with unintended trades. [Bloomberg, earlier]

Knight Capital Group Chief Executive Officer Thomas Joyce said in a letter to clients yesterday the company is “in good standing” with clearing firms and its broker-dealer units have sufficient capital. Joyce also said the post-tax loss stemming from Knight’s trading error was about $270 million, compared with a previously reported pretax loss of $440 million. The letter comes a week after Knight, one of the biggest market-making firms in the U.S., was driven to the brink of bankruptcy after a technology malfunction spewed orders into the market by mistake. [Bloomberg, earlier]