Is a NYMEX-Optionable Buyout in the Works?

Optionable, Inc. (OPBL.OB), a leading provider of natural gas and other energy derivatives brokerage services, announced last Tuesday record results for its fourth quarter and year ended December 31, 2006. The company reported revenues that increased 310% for the fourth quarter and net income that increased 859%. Revenues for the fourth quarter ended December 31, 2006, were $6.8 million, with net income of $2.5 million, or $0.05 per diluted share. However, shares failed to rally much, probably because earlier in the year, the company reported that for the month of December, it executed a record of 1,780,659 options and swaps contracts for its clients. Therefore, the Street was not totally surprised by the company's growth and earnings numbers.

OPBL.OB 1-yr chart:

Yet, on Friday, shares unexpectedly rose $1.22, or 20.50%, to $7.17 on volume of 6.1 million shares compared to the daily average of 872,618 shares traded. The move could be attributed to speculation that NYMEX Holdings Inc. (NMX) will increase its stake in the company. On January 22, Optionable announced that NYMEX, the world's largest physical commodity exchange, would purchase a 19% stake in the company. Given Optionable's expansion and growth in the derivatives business, it is certainly not out of the question that NYMEX would increase their stake in the company, or even launch an outright bid to take over the company before its shares become too expensive. Such a move would be the catalyst for further upside in Optionable shares that have already had a terrific run over the past six months.

Comments

[bobbyjoe]

Firstly, OPBL doesn't need a "catalyst" to go higher. It's a rapidly growing company.

"The move could be attributed to speculation that NYMEX Holdings Inc. (NMX) will increase its stake in the company." Or, the move could be attributed to:

It is a rapidly growing company which is now attracting much attention from Wall Street, as the tremendous increase in volume indicates.

Lastly, the founders still own about 26% of the company. NYMEX has the option to exercise options at around $4, but only to increase its stake to 40%.

My knowledge of law isn't great, but my understanding is that the huge insider ownership and existing warrant agreement (that caps ownership at 40%) will hinder a buyout attempt. Of course anything is possible... only a lawyer would be able to make an informed opinion on this.

I wouldn't buy OPBL in anticipation of such an offer. I'd buy it because of the company itself.

Disclosure: I am long OPBL.OB