BancFirst shares take up, down ride
BancFirst shares take up, down ride
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By Don Mecoy
Published: September 23, 2008
Shares of Oklahoma City-based BancFirst Corp. have taken quite a ride in the past three trading days, although nothing significant has happened recently at the bank holding company.
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Short sale to blame?
The stock fell $16.10 on Monday after soaring more than $20 in the previous two days. After trading as high as $73.10, the stock closed Monday at $57.
A short seller is the likely culprit for the sudden volatility in BancFirst's stock prices, said Bob Rader, senior vice president of Capital West Securities in Oklahoma City.
"It just didn't look like it was an orderly buy order,” Rader said. "I really believe it was a short cover.”
Traders short sell a stock when they believe that the price is going to fall. Short sellers borrow shares and sell them, replacing them later with shares bought after the price falls. The short seller pockets the difference, but can lose big when the price rises.
Practice banned
However, regulators temporarily have prohibited short sales of financial stocks to calm roiled markets. Last week's sudden price spike in BancFirst shares may have been caused by one or more short sellers being forced to buy shares to close their positions, Rader said.
Monday's sharp decline likely was a return to a more reasonable market value, Rader said.
David Rainbolt, BancFirst chief executive officer, said the stock was trading at an all-time high before the recent turbulence, and has maintained that level after the apparently artificial price spike.
"We feel great that our stock price has held up in such good form in the middle of one of the worst markets for financial stocks in our lifetimes,” Rainbolt said Monday.
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