FCStone Group (FCSX)

The raw numbers were very impressive. Revenues were $91.2 million up 52% from last year. Earnings (ex items) were $0.61 per share which nearly doubles the 32 cents earned in the same quarter last year. The company actually took a one time write down but it was not related to the same financial and liquidity issues expected.

In fact, management decided to shutter a biodiesel plant it had been working on bringing online. After considerable investment, it became clear that the plant could not be used in a profitable manner and so management took the difficult but wise step of cutting off further investment in this venture and instead will look at the possibility of selling the property to another party. While the failure is a bit of a disappointment, this was not a core part of the company’s business.^[1]

1. ↑ http://zachstocks.com/2008/04/fc-stone-group-fcsx-the-smoke-is-clearing/

FCStone has very little exposure to the actual direction of prices, but benefits from increases in trading volumes through its commission generating trading arm.

In addition to commissions on exchange and over the counter [OTC] trades, the company also makes consulting fees by working with clients to establish a comprehensive solution to their risk management needs. Management stated that it has witnessed no change to its operational business model over the last 90 days, so while it is continually monitoring its own risk associated with standard business, the overall environment is strong.

The positive results were driven by higher activity in trading and consultancy services as volatility in the commodities markets continues to drive demand for risk management. ^[1]

1. ↑ http://zachstocks.com/2008/04/fc-stone-group-fcsx-the-smoke-is-clearing/