Knight Capital Group Inc. (NYSE:KCG)’s computer bug, may very well cost the company its very existence. After their computer went crazy yesterday morning, and completed in 15 minutes, a series of trades meant to be done over several days, the company lost $440 million. This is a whopping 4 times their profit for all of last year.
There were reports that the executives at Knight were searching for emergency funding, or even a buyer to help them stay afloat. It doesn’t look good for the investment firm, as stocks continued to drop yesterday, losing 63% in the wake of the massive computer glitch. In after hours trading, Knight’s stock dropped an additional 13%.
Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More
This massive hemorrhage of capital has caused investors to lose faith in the giant trade management firm, who handles 11% of US stock market trades. As stocks fell, investors hurried pulled their funds and took them elsewhere. One can not help but wonder if Knight will be able to staunch the bleeding.
This event has caused the federal government to take a closer look at both Knight Capital Group Inc. (NYSE:KCG), and the methods of high speed trading. The SEC is still gathering information about the exact cause and effect of yesterdays meltdown before determining a course of action regarding Knight Capital.
This year has been a year of several computer failures, which have indeed bled Knight Capital Group Inc. (NYSE:KCG) dry over the last few months. You may recall that we covered the story of Facebook Inc (NASDAQ:FB)’s failed IPO earlier this year. That instance cost Knight Capital Group Inc. (NYSE:KCG)’s over $30 million dollars, and severely hurt the firm. This time, they are left holding an empty cash bag, and scrambling to catch a breath of relief.
Knight Capital Group Inc. (NYSE:KCG) stock opened at $3.19 per share this morning and is currently trading at $3.28, a rise of .71 %.