Investment Technology Group (NYSE:ITG)

value

notablecalls.blogspot.com featured an upgrade call on this one today

Very good chart.

low relative PE, good star & 2010 earnings. Bottom fishing week of 2/8

great business model, great numbers

Asterism Output:
12.2/14
13.2/18.6

10.68x times forward earnings. That's before you back out eight dollars in net cash. Back out the cash and you come up with a forward PE of 7.97. Not bad for a company that takes no risk. The company offers an execution platform, order and portfolio optimization and other services for mutual funds and hedge funds. Formerly a unti of Jefferies this company grew revenues at 15% last year and 50% the year before, oh and that is just US Operations. International revenues grew at 61% last year and 19% the year before and remain 15% of total sales.

Consider that once the platform has been developed all incremental sales above fixed costs fall to the bottom line. In the depth of the markets in 2003 and 2004 ROE dropped to a low 11.7% while sales declined by 13.8%. Since this time ROE has stabilized at around 16%. Book Value currently stands at $17.55 per share. A 12% ROE disaster at the firm would put them earning $2.10, not the $2.96 forecast. Ex out eight dollars in cash and you currently have a stock trading at 11x FPE. Not too bad for a worst case scenario.

Profits falling, analysts are are lowering their estimates and ratings, sounds like the perfect time to swoop in a pick up a quality company that is producing excellent products for institutional investors.

The catalyst, I think, will be increasing margins in their international markets business. This may take some time to play out, but given the beating the ITG's share price has taken in 2008, I think now is a good time to buy in...

Strong Earnings report did not stop analysts from downgrading this stock. Strong track record of growth and beating estimates. International growth strategy will pay dividends. Additionally, this could be a takeover candidate when large investment banks reload capital - TGT - 51.50 in 07/08

Undervalued. Likely takeover candidate within two year timeframe.

Strong underlying growth in global electronic trading combined with a robust us equities market will continue to benefit this company. The risk is a major disruption to the equities market and/or the companies inability to update its technology.

This stock has strong fundementals and the general consensus is that it is undervalued in the low 40s.

Mutual fund companies now have seperate payments for trading and for researching. This gives them the option to choose the trading firm that provides the best execution, value, and trading resources. Invesment Technology Group will be that company. Additionally, the company provides services to help measure and to minimize trading costs, which improves the rate of return for its clients. Recently, the company acquired Macgregor, an order management company as well as Plexus Group's post-trade performance measurement software. These two moves will help ITG access new customers while improving the quality of its current offerings.

Revenues jumped in 2005 because of acquisitions. Sales are expected to grow in-ine with the growth of the equity market volume at roughly 15% per annum. Operating margins have remained above 20%.

Target Price: $71.00
52 Wk High: $59.07 (-33.1%)
52 Wk Low: $34.43 (14.6%)

-compelling business -high barriers to entry -few competitors -strong financials -strong earnings -oversold due to myopia -buyout candidate or to be influenced by buyouts, p/e must rise as result

It serves institutional investors, brokers and alternative investment funds, and money managers in the United States, Australia, Europe, Canada, Japan, and Hong Kong. The company was founded in 1983 and is headquartered in New York City. Investment Technology Group, Inc. acquired The Macgregor Group, Inc. in January 2006.

last great independent trading tech firm

Investment Technology Group specializes in trading software (especially trade execution performance tracking). It also maintains a quasi-exchange, POSIT, where traders can cross large blocks of shares anonymously.Operating margins are typically in the high 20s. Excellent software and POSIT make ITG an excellent acquisition candidate in the technology-driven consolidation of exchanges.