What’s up with Leucadia?

Have you seen the move made by Leucadia National (LUK) lately? The stock is up nearly 20% in past three months, especially in recent days. The company sold its big stake in MCI late September for a profit of about $20 million. This was a surprising turn around after the company decided to make a formal bid for MCI. (Wall Street Journal predicts a whole slew of Telecom Mergers are coming!)

The investment firm had previously acquired WilTel Communications and ATX Communications when they filed for bankruptcy, which seemingly legitimized the bid. So was it merely a case of cold feet, or did Leucadia engage in a classic “pump and dump” when it announced that it had sold all of its 5% stake for $266 million, a $20 million profit over its purchase price, a little over two months later? One widely quoted analyst, Muayyad Al-Chalabi of telecom consulting firm RHK, claimed even before Leucadia sold its shares that it “looks like a classic pump and dump.”