Volume Spike Investor

Mariner Energy, Inc. (NYSE: ME), which is being acquired by Apache (NYSE: APA), has just seen an exponential volume surge due to the sticky nature of any offshore drilling accidents after the BP plc (NYSE: BP) disaster in the Gulf of Mexico.  Mariner’s spokesperson on CNBC said that a fire took place about an hour ago, and that the oil well(s) around the area have been shut in and that all personnel have safely been evacuated.  The company believes that there is no oil leaking nor that any has spilled in the area.

Update 12:30 EST: It turns out that this was a production platform that was not in production.

At 12:10 PM EST there have been over 24 million shares traded hands versus 4.4 million shares on average.  The stock fell to nearly $20 during the panic selling, but now shares are down “only” 2% at $22.85.  The 52-week trading range is $11.35 to $26.32.

JON C. OGG

Burger King Holdings Inc. (NYSE: BKC) is feeling some joy on fresh buyout rumors that private equity is looking at taking the fast food retailer private.  Keep in mind that Burger King already went private with private equity and has come back to the stock market as recently as 2006.

Joe Kunkle of OptionsHawk.com noted, “I put out a note to clients on 8-25 that unusual call buying seemed to indicate Burger King could be bought out in a consolidating restaurant industry.  On the day more than 26,500 calls traded, more than 10X average with more than 16,000 far out of the money October $20 calls bought at $0.50.  Implied volatility spiked 31% higher on the same day the Company had reported earnings, an event that usually cause implied volatility to fall, so it was obvious that option traders were positioning for a potential takeover.”

Kunkle further noted, “The following day, August 26th, more than 6,900 September $20 calls were bought with shares at $17.25, fairly outlandish lotto ticket type bets without any notable near term catalysts in a weak market environment.”

UPDATE from 7:25 AM EST… As of 9:00 AM EST we have nearly 500,000 shares traded and shares are up 16.5% at $19.17 versus a 52-week range of $16.31 to $22.19.

One question needs to be posed here: If this has already been private under private equity and it came public, what is the goal and the exit strategy that is any different than what management has currently?  What can it do differently from now to take a couple percentage points from McDonald’s?

JON C. OGG

Mediacom Communications Corp. (NASDAQ: MCCC) is the subject of what may be a severe volume spike this morning on very negative trading trends.  Here is why… Rocco Commisso withdrew his offer to take Mediacom Communications private by acquiring the rest of the shares he does not already own.  Here was his statement:

• “I am very disappointed with the highly unusual process and ground rules established by the Special Committee and its financial and legal advisors to evaluate my proposal. I firmly believe that the Special Committee’s decision is not in the best interests of Mediacom’s shareholders.”

Shares just opened down 16% at $5.74 and as of 9:33 AM EST there have already been almost 200,000 shares traded versus an average volume 424,000 shares.  The $5.74 price compares to a close yesterday of $6.85 and a 52-week range of $3.85 to $7.65.

JON C. OGG

ArcSight, Inc. (NASDAQ: ARST) jsut saw a volume explosion late in the trading day after the WSJ  announced that ArcSight was up for auction and that it could fetch $40 per share.  Whether that comes is another issue, but shares are up 28% at $36.37 on more than 1.9 million shares.  Average volume is only about 420,000 shares and the 52-week trading range WAS $17.51 to $29.33 before today’s explosive move.

ArcSight has been public since only early-2008 and this move above $30 represents all-time highs in the stock.

The company is a security and compliance management solutions provider that identifies and mitigates cyber threat and risk for businesses and government agencies with a complete visibility and critical insight into their IT infrastructure across all users, networks, datacenters and applications.

JON C. OGG

Ceraplast, Inc. (NASDAQ: CERP) is a tiny company in a very promising sector.  The company rang the opening bell at the NASDAQ this morning to help further promote its bio-based resin business, which in short means biodegradable plastics.  This field is still emerging despite a 15 year effort to get off the ground, and Ceraplast may be one of the ones that makes it in the field.

We are seeing what is already a 12X volume alert: at 11:10 AM EST the stock is up 11.2% at $3.78 versus a 52-week range of $2.78 to $7.00.  The volume is already over 750,000 shares versus a 3-month average of only about 63,000 shares.  The market cap is still a tiny $48.7 million.

Keep in mind that this is the second such day of a rally because yesterday came the announcement that RI M.E. Masterbatch would supply bioplastic resins for the European markets.  To show just how small this company is: it generated only $684,431 in gross sales for the three months ended June 30, 2010, and that was down 24% year over year.  The company had net unrestricted cash of $5,866,283 at June 30, 2010.

Lots of promise here.  Lots of risk as well.

JON C. OGG

PricewaterhouseCoopers has finalized plans to purchase technology consultant Diamond Management & Tech in a $378 million deal. As of 8:44AM EDT, shares of DPTI were up 31.03% to 12.50, well above its 52-week range of $5.58-$11.56. The stock has traded 224,914 shares in volume. The stock trades with an average volume of 2.5 million shares.

-Michael B. Sauter

Diamond Management & Technology Consultants Inc. (NASDAQ: DTPI) skyrocketed this morning in pre-market trading on news that PricewaterhouseCoopers LLP would buy the company for $378 million, or $12.50 a share.  At 8:35 AM EST shares had jumped 30.82%, from $9.54 to $12.48, and has already traded 3,076,220 shares.  This is a much greater amount than the company’s average of 224,914.

The deal aims to expand PwC’s advisory business.  With unanimous approval coming from both company’s boards, the deal is expected to go through in Q4.

-Michael B. Sauter

Research In Motion Limited (NASDAQ: RIMM) was downgraded by Morgan Stanley (NYSE: MS)  from overweight to underweight. As of 8:16 AM EDT, RIMM was trading  at $49.00. This was 2.89% below yesterday’s close, which saw the stock down 1.03%. RIMM stock is nearing the bottom end of its 52-week range of 47.42 to 88.08. The stock has traded 54,401 shares, with an average volume of 15.2 million.

-Michael B. Sauter

Corinthian Colleges Inc. (NASDAQ: COCO), the for-profit, post-secondary education company, is down 6.85% in pre-market trading this morning, from $5.40 to $5.03, and has already traded 60,660 shares.  This change comes during a 52-week  range of $4.88 to $20.29, effectively highlighting the company’s hardships, which involve a 51% 4-week price decline.

Corinthian Colleges is currently under investigation for violating federal securities laws for requiring students to pay back loans at a slower rate than they informed investors.

-Michael B. Sauter

Petrohawk Energy Corporation (NYSE: HK) is almost challenging its 52-week lows today on light trading volume in the stock.  And shares are down 2.2% at $15.82.  So why is it that there is unusual options trading out in December today?  Take a look at the DECEMBER 2010 CALLS trading today:
CALL$    Volume    OpInt
$16.00    2,017    737
$17.00    2,445    3,286
$18.00    15,226    2,063

There were also 6,041 contracts of the DEC-2010 $14.00 Puts, versus a meager open interest of only 202 contracts.

The front months saw some unusual activity in the SEPT-2010 $23.00 PUTS at 7952 contracts vs. 8,388 contracts in the open interest.  The SEPT-2010 $24.00 PUTS saw 7952 contracts trade so far vs. 8,388 contracts in the open interest.

The company recently tendered debt, in a refinancing after selling $825 million in notes.  The company also has two conference presentations coming up.

This is a bet that something solid may be brewing now that it is so low to 52-week lows. At $15.82, its 52-week range is $15.50 to $28.49.

Jon Ogg