Volume Spike Analysis in Penson (PNSN)

Posted in General 
May 12th, 2011

Penson Worldwide Inc. (NASDAQ: PNSN) is experiencing a massive volume spike for the second day in a row that marks a third day down.  We have no data indicating this, but the extreme volume spike with lower prices in the securities clearing and processing firm is looking very similar to what we saw when major brokerage firms were rumored to be imploding back in 2008.  Again, we have not heard any rumors that Penson is facing these issues in a real manner and we also do not want to fuel any rumors as they can be unfairly devastating to a firm.

A call has been placed to get to the bottom of this issue and we are awaiting a call back from company representatives. 

There are online messages and chats about municipal bond accounting, but this is very vague and it may not even be a financial issue in reality.  Sandler O’Neill cut its price target to $4.50 from $5.50 and maintained a “Hold” rating per CNBC data earlier this morning.  The move today and this week is certainly worse than just an analyst downgrade.    

Just on Tuesday this was above $5.00 with a drop of $0.29 to $5.16 on elevated volume compared to recent days.  On Wednesday this hit 2.26 million shares and the stock fell to $3.393.  Today we have a 21% loss to $3.05 on almost 4 million shares as of 12:30 PM EST.

Average volume is only 120,000 shares and this is an extreme reading.  Most trading days this does not even trade 100,000 shares.  Shares hit a new 52-week low today and the 52-week trading range is now $2.73 to $8.09.

For now, we are simply awaiting more data for clarity.

UPDATE at 3:30 PM EST: A clarification statement has been issued by Penson and shares were halted at 3:17 PM EST.  Full detail at 247wallst.com.


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