Heavy trading and a run-up in the share price of Investors Capital Holdings Ltd. (ICH), the parent company of independent broker-dealer Investors Capital Corp., is fueling speculation that the firm has become an acquisition target.
Trading volume spiked Sept. 5, with 434,100 shares changing hands and the price of the stock briefly reaching $8.90 per share, its 52-week high.
The typical daily trading volume this year has been closer to 13,000 shares, according to Yahoo Finance. Shares traded at $4.05 as recently as Aug. 30. Its low for the year is $2.96 per share.
Volume settled down last week, and shares traded in the $5.70 range.
The company issued a press release after the volume spiked Sept. 5, saying that it had been contacted by the New York Stock Exchange in accordance with the Big Board's usual practices. Investors Capital's “policy is not to comment on unusual market activity,” according to the release.
MERGER TARGET HUNT
Investors Capital Holdings is a micro-cap stock with a market capitalization of $41.6 million. But with brokerage firms scouring the market for potential merger targets, Investors Capital may be seeing interest, as indicated by its volume and price volatility, one industry observer said.
“The spike in volume and price, along with the "no comment' press release, could mean that Investors Capital is an acquisition target, and time will tell,” said Brad Fay, an independent third-party recruiter who focuses on midsize broker-dealers such as Investors Capital. “With 450 producers on track for $80 million to $85 million in revenue, it could be the right size and fit for a firm to achieve scale needed to reduce fixed costs and offset increased regulatory expenses.”
Bob Foney, a spokesman for Investors Capital, said he could not comment beyond what was in the company's press release.