Trading in the overall market was relatively normal yesterday; your average worry about the fiscal cliff and Europe snuck their way in, but there was nothing out of the ordinary. That is, until you looked at Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) stock for the day. This major copper and gold producer was absolutely slaughtered, as investors participated in one of the nastiest sell-offs we have seen in recent weeks. But the massive drop had nothing to do with the commodities they produce, but rather a questionable business move that left many scratching their heads [for more copper and gold news subscribe to our free newsletter].
Inside the Sell-Off
Let’s start with the sheer volume of this move. As of yesterday, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) traded around 14 million shares on an average day; Wednesday’s session watched over 153 million shares exchange hands, more than ten times the average volume. The stock price dropped from $38.28 to $32.16 during the day, representing losses of 15.99%. But the hit, unfortunately, has yet to stop. As of the first 30 minutes of trading this morning, the stock traded more than 18 million shares (eclipsing their new average daily volume of 17.1 million shares) and was down nearly 4%. FCX is currently at its lowest point in the trailing 52-weeks.
So why the sudden apocalyptic sell-off? Yesterday, Freeport announced that they would be acquiring McMoRan Exploration and Plains Exploration & Production. This move was seen as highly controversial, one of the largest shareholders of the stock said that the management of Freeport had broken shareholder trust. ”I haven’t heard anything on this call that in any way justifies why these companies should be put together,” said Evy Hambro, a managing director at BlackRock, during a conference call to discuss the deal.