Is Investors Capital in play?

Spike in trading and share price fuel speculation that B-D parent is acquisition target.
SEP 09, 2013
Heavy trading and a run-up in the share price of Investors Capital Holdings Ltd., the parent company of independent broker-dealer Investors Capital Corp., is fueling speculation that the firm has become an acquisition target. Last Thursday saw an intense spike in its trading volume, 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 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. Trading settled down on Friday, but heavier-than-usual trading resumed today, with more than 47,500 shares traded as of 2:11 p.m. The share price for the day fluctuated between $5.46 per share and $6.10 per share. The company issued a press release after the volume spike on Thursday 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. Investors Capital Holdings is a micro-cap stock with a market capitalization of $41.6 million. But with brokerage firms currently scouring the market for potential merger targets, Investors Capital may be seeing interest, as indicated by its volume and price volatility, said one industry observer. “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 Thursday. In 2011, managers and reps from the firm bought about 40% of the firm in 2011 from its founder and longtime chief executive, Theodore E. “Ted” Charles, who retired. Mr. Charles and his family controlled the majority of the company's shares, which they sold at the time for $4.25 per share. A heavy buyer of the stock this year has been Investors Capital rep and director James D. Crosson. According to Reuters, Mr. Crosson has made 22 insider buys of company stock this year through Sept. 2 while the other six members of the board, including CEO Timothy Murphy, made 24 purchases. Mr. Crosson was not available for comment.

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