Leading online broker and market maker Interactive Brokers recently filed an S-1 with the Securities and Exchange Commission, and investors should keep this name on their radar screens.
While unknown to most of the public, Interactive Brokers is among the 20 largest securities firms in the country, and it is very popular with highly active traders due to its cheap commission rates and robust trading platform.
To my delight and to many bankers' disgust, Interactive Brokers, which proposes to trade on the Nasdaq under the symbol IBKR, will be going public via the Dutch auction method, with W.R. Hambrecht running the deal. In addition, the company will retain a very complex ownership structure designed to leave voting control in the hands of Chairman and CEO Thomas Peterffy.
In the first nine months of this year, Interactive Brokers reported net revenue of $969 million, up 43% year over year, with pretax income up 47% to $600 million. This growth is simply enormous relative to traditional online brokers like E*Trade (ET) and TD Ameritrade (AMTD), and I plan on doing a lot of homework on this deal.
Between the Dutch auction and the company's complexity, Interactive Brokers could end up being an incredibly cheap stock. Sell-side firms will want to see a large deal like this fail because they won't be collecting big, fat banking fees on it. Given Peterffy's control over the company, the media will probably trash this deal as being shareholder-unfriendly.
Google's (GOOG) auction was frowned upon by many. And we've seen many companies with convoluted ownership structures, like Lazard (LAZ), get heavily criticized by the media. In spite of that, they ended up turning into stock market home runs
Monday, January 1, 2007
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4 comments:
Michael,
I'd appreciate your continuing to comment on this one.
With the IBKR ipo auction commencing in a week or so, any further comments on valuation? attractiveness? thx.
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This is a raw deal. The maximum dividend payout works to about 2% The best hope is that the stock would appreciate despite the lack of assets backing it. I bloged about it in more detail.
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