Alright, I've had a chance to look through Virtu's Q2 results in more detail. Below is my post-earnings thesis on the stock explaining why I continue to own it & remain bullish over the next 12-36 months:
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As with any stock, there's always the chance for a multiple re-rating if external factors change how the market values Virtu (M&A/activist target news, new projects added, etc...) If my 10x 2024 revenue moves to 12x for example we have a $36 floor instead of $30.
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I remain long Virtu. My floor valuation exercise gets me a conservative $30 per share with the potential for surprise volatility to push EPS and returns higher than that. Open to questions/feedback. FIN
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Doug is very strong
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How does the entrance of HRT factor in?
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It doesn't factor in at all, clearly
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No questions. Well done.
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no mention of crypto trading?
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$5.5M adj NTI (pre-growth initiatives) is the median outcome, not a floor. the floor is more like $4.0M and $1.15 they did in 2019 + low-end of growth initiatives so floor is more like $1.40. i agree with framework but think your numbers are more like a “core” vs “floor” outcome.
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i'd say CME gets higher valuation bc: -1/5 of revenue is recurring (market data/other) -even the non-recurring tx rev is still basically recurring, since everyday ppl have to trade on the CME (and clear!) -proven near indestructible monopoly -equity is an interest rate hedge
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i guess i see CME as a toll booth that depends on how busy traffic is, whereas VIRT is a traffic camera that uses an algo to ping speeders and get larger, sexier fees. more fees when traffic is crazy (volatile), however theres always a chance the camera has technical issues
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Nice write up. I have been long since Cifu bought the dip last year. I did trim some on the way up though and this most recent dip is giving me a chance to load up again. Altria also has a low multiple, sometimes public just don't like sectors. Maybe if
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You had “surprise volatility” spike in Q1 and it didn’t do much. There is a general hunt for yield in the market as silly as it sounds it might make a huge difference to raise the dividend & reduce the buyback. I can’t believe that no one wants to acquire or take them private.
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