Shares of Hong Kong-based Magic Global Empire (NASDAQ:MEGL) stock are up by more than 400%, although it isn’t exactly clear why. The company operates in the financial industry and provides corporate finance and underwriting services. Another Hong Kong-based financial company, TOP Financial (NASDAQ:TOP), is attracting attention as well after its shares jumped by more than 1,000% after yesterday’s close. Hindenburg Research founder Nate Anderson tweeted out his opinion that the move in TOP stock is attributed to a pump-and-dump scheme concocted in a chat room.
This isn’t the first time that MEGL stock has experienced an unexplained price appreciation. Following its initial public offering (IPO) last August, in which 5 million shares were offered at $4 per share, MEGL skyrocketed by an astonishing 2,000%, reaching a price level in the $90 range. The gains were short-lived as shares of Magic Global plummeted lower by 90% shortly after.
Is market manipulation behind the outsized gains? It’s certainly possible, and the Securities and Exchange Commission (SEC) seems to be taking notice. Following the IPOs of MEGL and TOP, the SEC requested information pertaining to the individuals who were allocated shares for small-capitalization companies that recently held an IPO.
“The fresh requests from Nasdaq aims at enhancing transparency on placements and connected transactions at IPOs, a lot like what Hong Kong regulators asked for a few years ago,” said Stevenson, Wong & Co partner Gordon Tsang.
5 Investors Betting on MEGL Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During Q4, only 11 13F filers disclosed a stake in MEGL stock, an increase of four filers from the prior quarter. Of these filers, none of them own Magic Global in their top ten positions. In addition, institutions only own 0.93% of all shares outstanding and 2.47% of the public float. Due to the low institutional ownership, we can make an educated guess that institutions were not behind the recent price incline.
With that in mind, let’s take a look at the five largest shareholders of MEGL:
- Renaissance Technologies: 49,042 shares. Renaissance acquired its entire stake during Q4.
- Schonfeld Strategic Advisors: 30,200 shares. Schonfeld acquired its entire stake during Q4.
- Morgan Stanley (NYSE:MS): 23,098 shares. Morgan Stanley sold 6,534 shares during Q4.
- Citadel Advisors: 20,488 shares. Citadel acquired its entire stake during Q4.
- Cantor Fitzgerald: 20,000 shares. Cantor acquired 5,183 shares during Q4.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
