Value and growth stock money managers might not be gung-ho about investing in the new New York Stock Exchange when it is expected to go public next month — unless they want to change the Big Board.
Value managers, fearful of the sky-high valuations of other publicly traded exchanges, might avoid buying shares of NYSE Group Inc., New York, while growth managers may hold off until the exchange's expansion strategy becomes clear.
But activist money managers and pension funds concerned with corporate governance at the Big Board are likely to become shareholders and use their ownership stakes to push for reform.
The stage has been set for the NYSE to go public next month, pending government approval, because members on Dec. 6 overwhelmingly approved the acquisition of all-electronic exchange Archipelago Holdings Inc., Chicago, just hours after Archipelago shareholders approved the deal.
"I can't imagine how anybody can build the investment case for any of these exchanges," said Harold Bradley, chief investment officer of U.S. growth equities at American Century Investments, Kansas City, Mo. "Is this a good investment or a story stock? Right now it's a story stock. It's the best story stock."
The first U.S. financial exchange to go public was Chicago Mercantile Holdings Inc., which launched its initial public offering at $35 a share in December 2002. It closed at $358.06 a share on Dec. 8. Its cross-town rival, CBOT Holdings Inc., went public last October at $54 a share; it closed at $94 on Dec. 8.