In Sleepy Week, IPG Stock Volume Triples

Agency chiefs at Interpublic Group were buzzing last week about the holding company’s soaring stock volume during an otherwise sleepy pre-Labor Day market.

On Thursday, trading in IPG’s stock nearly tripled over its average daily volume of 2.7 million shares, with 6.5 million shares trading hands. The stock climbed over $15 before ending the day at $14.99, up 2.7 percent from the previous close.

On Friday the stock closed at $15.15, clearing the $15 threshold for the first time since Jan. 14.

In the absence of an announcement, some IPG agency CEOs wondered whether the unusual activity lent credence to recent speculation that an investor might be accumulating shares with the intention of forcing a management change at the top. A representative of the holding company said IPG is not aware of any shareholder taking a substantial position or planning a challenge to its executive ranks.

In contrast to IPG shares, last week Omnicom and WPP Group’s American Depository Receipts traded well below their daily averages of 1.4 million and 134,500, respectively.

Analysts including Merrill Lynch’s Lauren Rich Fine explained IPG’s surge by saying it could represent “generic buying of perceived lowest multiple name in a group [in order] to play a cyclical turn.” Rich Fine elaborated: “As investors are trying to find cyclical names to hold that have yet to move, coupled with the perception of bottom fishing—that IPG is undervalued—it favors companies like IPG.”

Fine added that days of light market trading typically lead to higher volatility. During the past month, IPG has traded at higher than its normal daily volume for 10 days. Much of that was in the range of 3.5 million shares or higher. On Aug. 13, the day after the company reported lower-than-expected second-quarter earnings, 8.4 million shares traded, with the closing price slightly off at $13.37.

Earlier, on Aug. 4, the company saw volume of 5.3 million shares, also with little change in price.

The spike in trading volume comes days before a pow-wow of IPG’s top executives at a conference center in Purchase, N.Y. This week’s stay-over sessions, dubbed “Camp IPG” by some, will be attended by 100 executives from IPG agencies around the world. (Some have been excused, however, including Hill, Holliday, Connors, Cosmopulos boss Jack Connors, who will be traveling on business.)

IPG chief executive David Bell is expected to talk about the hits and misses of his first six months in the job, as well as his long-term vision for the company. Also speaking will be COO Chris Coughlin, who joined the company in June and is leading its efforts to reduce costs through consolidations, shared services and layoffs.

During breakout sessions, executives will be asked to solve theoretical problems, leading one source to grouse, “What is this, junior account executive training?” Another source, however, took the idea of such exercises in stride, noting, “The whole thing is about promoting cooperation.”