Have you seen the move made by Leucadia National (LUK) lately? The stock is up nearly 20% in past three months, especially in recent days. The company sold its big stake in MCI late September for a profit of about $20 million. This was a surprising turn around after the company decided to make a formal bid for MCI. (Wall Street Journal predicts a whole slew of Telecom Mergers are coming!)
The investment firm had previously acquired WilTel Communications and ATX Communications when they filed for bankruptcy, which seemingly legitimized the bid. So was it merely a case of cold feet, or did Leucadia engage in a classic “pump and dump” when it announced that it had sold all of its 5% stake for $266 million, a $20 million profit over its purchase price, a little over two months later? One widely quoted analyst, Muayyad Al-Chalabi of telecom consulting firm RHK, claimed even before Leucadia sold its shares that it “looks like a classic pump and dump.”
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3:19 PM PT
[...] Stock markets are rejoicing at Level 3’s attempt to become the consolidator in the bandwidth market. I am not too sure. Ask yourself this question - if Leucadia was willing to sell WilTel, it means they have had enough of this market. They will soon get rid of those 115 million shares of Level 3 as well, soon. Hey anyone know if Level 3 will have to pay Williams Companies for the right-of-way? Or will they de-comission the Wiltel network? From a financial perspective, this will help ease some of the financing issues facing Level 3! [...]
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