I pulled the trigger this morning and sold my $CBOE position to buy Tradeweb $TW.
An explanation of my decisions below:
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Why
$TW instead? Their biz is booming even in a low rate environment, which Q4 earnings validated. New technologies are directly translating into happy clients & more market share. Treasuries - streams, eSpeed Mortgages - spec pool trading Corporate bonds - portfolio tradingpic.twitter.com/q0E3Oz7lBP
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I’ve been notably bearish on the name for the last ~4 months – I’ll lay out the reason for my pivot from bear to cautious bull below.
I'm willing to pay a premium for a higher quality business with investments that are paying off *today*, rather than a discount for a promise that investments *may* payoff in the future with little to back this up right now. Open to questons/feedback/criticism if any!
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How do you see their long term growth? (Assuming low rate environment stays)
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$TW's growth trajectory looks promising to me. Management talked about swaps in particular as a key focus - a huge market with plenty of room to grow share. Below from management during earnings:pic.twitter.com/6zcHxj9u8L
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Thanks. Twitter will use this to make your timeline better. UndoUndo
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Can you see the CBOE European derivatives business working out? I can't see how they are going to build any volumes with the CBOE UK 100 or CBOE Eurozone 50 indexes... https://www.cboe.com/europe/derivatives/overview/ …
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I agree. A rising tide might lift all boats, but I don't see it happening for a long time with Brexit & potential new regulations muddying the waters. CBOE may have a unique angle to grow in Europe but i'm not willing to stick around to find out
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I agree with the thesis. I'm also long TW. For me the pieces of M&A
@CBOE don't really add up. Also European derivs initiative is a BIG lift. Best upside for CBOE I see is M&A on weakness. I'll buy below $80. Also IMO, you can't see exchanges and likes of VIRTU as in same sectorThanks. Twitter will use this to make your timeline better. UndoUndo
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Love it amigo. Curious why you chose TW over MKTX? Valuation perhaps?
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I would say yes, valuation despite very similar selling points. MarketAxess is owning one market & can sell this story to investors easily, hence more of a premium. Tradeweb has more than one market to manage which makes it more complex/harder to predict.
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Namaste, here is your unroll: I pulled the trigger this morning and sold my
$CBOE position to buy… https://threadreaderapp.com/thread/1358837140579311620.html … Have a good day.
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