AKRON, Ohio — There are many questions about FirstEnergy’s alleged involvement in the bribery scandal, that has Ohio House Speaker Larry Householder at the center.
“Even a few days ago, it had fallen dramatically from a high of about $41, $42 down to about $35 before the news broke. So someone knew something ahead of time,” said Greg Harmon, an assistant professor of banking and finance at the Weatherhead School of Management at Case Western Reserve University.
Harmon also runs his own investment management company and has decades of trading experience.
He said when the news broke about the FBI’s investigation into bribery and racketeering allegations against Ohio House Speaker Larry Householder, that also involved FirstEnergy—it became fight or flight mode for investors.
“The first thing that we see when bad news comes out is sell first, ask questions and find out what to do about it later. So everybody’s sold off, and the stock drops about 25 percent,” said Harmon.
But in reality, Harmon said this is a great buying opportunity.
“I do a lot in the options market. Traders I talked to are putting on trades that take advantage that over the long term, using a lot of leverage to do this. That’s a really bullish implication when they’re not just buying the stock, but they’re using leverage to buy the stock as well. This is a stock you want to own, a stock that you would buy here, and it pays you 5 percent every year on top of the aspect of the market participants think that the stock price is going to go up as well,” he said.
Harmon adds that due to the nature of FirstEnergy’s business model, investors should not consider this a risky investment or worry about the impact on retirement accounts. Harmon is confident the market will bounce back.
“When you sit back and look at this company, the fundamentals of this company and the size of the problem that was created here, less than $200 million versus a company that has $12 billion a quarter in revenue. This is a very small impact to their financials,” said Harmon.
FirstEnergy is headquartered in Akron.
According to the company website, the corporation considers itself one of the nation’s largest investor owned electric systems, serving six million customers throughout the Midwest and Mid-Atlantic regions.
The serious allegations of corruption are a lot to process for the people who live here.
“It’s concerning for the city of Akron and the downtown community,” said Chris Niekamp.
Niekamp works right by FirstEnergy downtown.
“It’s very shocking, you know, $61 million is a whole lot of money that was spent to promote that bill. I think that bill had merits on its own. It’s just surprising that they would go to those means to spend that kind of money to support that kind of bill,” said Niekamp.
