LaBranche & Co., Inc. is a specialist firm on the New York Stock Exchange. As of 3/00, LAB acted as a specialist in 413 common stock listings. For the FY ended 12/31/00, total revenues increased 72% to $344.8M. Net income totaled $81.9M, up from $29M. Revenues reflect an increase in the net gain on principal transactions. Net income also reflects the absence of a $56.2M managing directors% compensation & a $25.3M limited partners charge.

February 15, 2001

Labranche & Company (LAB) is one of the leading specialist firms on the New York Stock Exchange. As many of our readers might already, the role of an NYSE specialist is to maintain a fair and orderly market for a particular security. Currently, LAB’s listed companies include 75 of the S&P 500 and seven of the 30 companies in the Dow Jones Industrial Average. Revenues for LAB advanced by 72% last year and are expected to climb by this same amount over the next 3 years. Additionally, the company has 48.98 million shares outstanding and 200 million shares authorized, which means we like the stock as a potential split candidate. The recent advance of the stock, not to mention today’s 8.57% breakout, gives us further hope that management might consider a stock split soon. With that said, we want to point out some of the important support and resistance levels we’re seeing on the chart. First, for resistance, we’ll look for strong barriers to arise at the $55 and $60 levels; advances through these levels on volume of 400,000 shares or better will set-off our entry signals. Next, for support, we can expect a good initial base to arise near the $50 mark, reinforced by the previous high of $49.19. Convergence of the 10 and 20-dma’s of $47.13 and $47.08 should provide a tougher foothold. A reversal off either of these support levels may present us with a buy opportunity, should good mid-day volume of 200,000 accompany the turn around.

Picked on February 15th @ $50.55
Change since picked 0.00
Stop Loss @ $44.50

February 22, 2001

LAB shares have since encountered an onslaught of sellers. Consequently, more selling created an early pullback in the stock that pushed LAB to our stop of $44.50. Although a rebound could take place at any time, we feel that the stock’s volatility at the recent top may be an indication of an impending trend reversal.

Picked on February 15th @ $50.55
Profit/Loss = -5.98 (-12%)
Best Profit = +0.97 (+ 2%)

February 20, 2001

This morning, New York based LAB fell sharply on news of a downgrade from brokerage firm Keefe Bruyette. The underperform rating by the firm sent shares spiraling lower by 7.66% to a close of $47.12. The drop handily took out our support levels at the 5- and 10-day moving averages, but finally held at an intraday low of $46.80. Despite the shake-up from the downgrade, volume trended lower from the two previous sessions, which is some indication of fewer investors willing to sell. Moreover, the intraday low hit an established support base near $47, which could lead to a bounce off current levels. But should a reversal unfold, we’ll look for initial resistance to now crop up at the 10-dma of $47.52. The 5-dma of $48.20 will also put forth resistance to this area, so don’t expect an easy breach through this zone. Upper opposition could next appear at the $50 mark and higher up at last week’s high of $51.45. Again, we’ll look for entry points to come when LAB shares move swiftly through these points on good daily volume of at least 400,000 shares. Support is now expected to come at the $45 mark, bolstered by the 20-dma of $45.62. We’ll keep our stops firm at $44.50 to safe guard us against further weakness.

Picked on February 15th @ $50.55
Change since picked –3.43
Stop Loss @ $44.50

February 18, 2001

Despite the misconception of many investors, trading volume is the most important driver of Labranche’s revenues, not the direction of the market. This bodes well for the company, as NYSE volumes have grown at a 23% rate over the last 5 years. This has mainly been due to an increase in managed assets and the number of households that now invest in the stock market. As for our play, LAB shares kept climbing on Friday and set a new all time high of $51.45. Despite having gapped lower at the open, the stock received a wave a buying that brought trading volume to more than double the 3-month average. This kind of buying activity is an important confirmation on the breakout and leads us to believe that a leg up to $55 may lie in store. Short-term technical readings also look healthy, with the stochastic pointing higher and momentum decisively up. Look for further resistance to arise at $60, should the stock break through $55. As for support, continue to look for a strong initial base to surface near the $50 mark, reinforced by the intermediate high of $49.19. Convergence of the 10 and 20-dma’s of $48.12 and $47.60 should create the next probable support base near $48. Let reversals off either of these levels present entry points, should good mid-day volume of 200,000 accompany the bounce.

Picked on February 15th @ $50.48
Change since picked +0.55
Stop Loss @ $44.50