Waddell & Reed Selling Off On News It Was Big S&P Futures Seller In Market Plunge (WDR)

Waddell & Reed WDR has been identified as a huge seller of S&P e-mini contracts in the midst of last Thursday's market plunge. This news has helped send the stock down around 5% today to $32.38. The chart in WDR does not look very promising, but the sell off on this news is totally unjustified. Waddell & Reed (WDR) manages over $70 billion in client assets through its network of financial advisors and mutual fund offerings. Many of these accounts are held at the firm by retail investors. While Waddell's trading in the e-minis during the market plunge may not look good at first glance, the firm was engaging in legitimate and completely justified hedging transactions to protect clients' heavy long exposure in a volatile market. If you liked WDR before this news, go out and by the shares right now. It is highly unlikely that the firm will be reprimanded or face adverse consequences as a result of their activity last Thursday. Waddell & Reed said in a statement that comments by the CFTC and other regulators “indicate that we are a ‘bona fide hedger’ and not someone intending to disrupt the markets. Like many market participants, Waddell & Reed was affected negatively by the market activity of May 6.”