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Egor Romanyuk's  Instablog

Egor Romanyuk
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I have worked as Logistics executive for over 10 years and have been trading BioTech stocks for secondary income. At age of 27 I retired and took up trading BioTech stocks as primary income.
My company:
Barna Financial Services Inc.
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  • FXCM On The Road To Recovery.

    FXCM stock is down nearly 90 percent since mid January.

    Can't go any lower, means buy them up cheap? Not always the case but may be in the case of FXCM.

    The company has ended up with -$225 million balance as a result of SNB removing the floor on EURCHF of 1.20 they did so after three years of having the floor in place after noticing the constant decline in the EURO .

    FXCM, as any other successful Currency broker allows their customers to trade at hefty margin, and has clocked in some decent profits year over year as the result. Unlike other brokers, FXCM guaranteed not to come after retail (RETAIL) customers if their account reach negative balances.

    As a result FXCM quickly went looking for help to cover the negative to comply with regulators in order to continue business as is. LUK came to rescue and gave them $300 million dollars ($279 million net). The loan comes with a hefty coupon of at least 10% annual and not exceeding 17%. first $50 million of the loan has to be paid by April 16th to avoid a penalty of another $30 million. The market and majority of analysts took the news negatively.

    Now lets crunch some number. FXCM had $327 million in cash and cash equivalents before the EURCHF black swan event. They borrowed $279 million. FXCM announced negative balance of $225 million but didn't say that this particular number was needed in order to regain compliance. I will assume that its lower, lets say $180 million (80%).

    OK, so they borrowed $279 million, used only around $180 million. leaving them with left over loan of about $100 million. The payment they need to make by April 16th is $59 million (50 million plus roughly 3% premium on $300 million)

    To me it makes sense that they are in a good position to make the payment by the due date. The ticker now trades between 2.05 and 2.25 and a market cap of about $100 million. If i am right in my assumption they have more than that laying around in cash and they continued their operations, which provide more revenue.

    My price target for mid April is at least $5 per share.

    Tags: FXCM
    Mar 10 1:46 PM | Link | 4 Comments
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