Ellie Mae Called Up to Stock Trading’s Majors

Ellie Mae’s stock will begin trading on the New York Stock Exchange. The stock has traded on the NYSE-owned American Stock Exchange since the Pleasanton, Calif.-based mortgage technology vendor’s $45 million initial public offering in April 2011.

In a company release, Ellie Mae said it expects its stock to stop trading on the AMEX on June 4 and begin trading on the NYSE on June 5. The company will retain its current ELLI ticker symbol.

When a minor league baseball player gets promoted, he’s said to be “called up” by the major league team. If the AMEX is akin to the triple-A Scranton Yankees, the NYSE is the Bronx Bombers. The stocks traded on the New York-based AMEX are typically for companies with small market capitalizations, while the NYSE has higher standards for companies listed on its exchange.

Aside from the prestige that comes to a company whose stock is traded on the 220-year-old exchange, the NYSE is more liquid than the AMEX and has more active traders. With higher volume trading comes more large institutional investors.

“Trading on the New York Stock Exchange is an important milestone in our progress as a public company,” said Ellie Mae CEO Sig Anderman in a statement.

Ellie Mae originally wanted to list its stock on the NYSE, but after a nearly yearlong IPO process that included slashing its offering price twice and lowering its projected proceeds by almost half, the company did not initially meet the minimum standards for listing on the NYSE.

Since then, Ellie Mae increased its 2011 revenue by 28% and income by 363% and nearly doubled its first quarter 2012 revenue, compared to the prior year periods. With the marked improvement, the value of Ellie Mae’s stock has increased 171% since the IPO and its market cap has increased from $122.4 million at the IPO to nearly $352 million, based on the $16.25 per share price at market close Thursday.

According to research by Bespoke Investment Group, Ellie Mae stock is the second best performer among the companies listed in the Russell 3000 equity index. The stock reached an all-time high of $16.48 per share on Thursday, but was not immune to the broad-based downward trend in stocks after the announcement of weak employment news. Ellie’s stock started to recede in morning trading Friday, trading at $15.83 per share at 11 a.m. EDT. 

Even with fellow mortgage technology firm CoreLogic selling its 12.3% stake in Ellie Mae, the company still has a number of large institutional investors. The move to the NYSE could bring even more because portfolio managers can more easily trade large volumes of the stock on the exchange. Liquidity is key for mutual and hedge funds, which look to buy or sell their position without moving the stock’s market price. Traders don’t want to initiate a sale that floods the market with excess supply and end up losing money on the transaction.