So instead of having to take that traffic and send it out externally, we’re going to take that traffic and send it internally. Moving on to the last slide, I’m really not going to dwell on this, because I think we’ve kind of covered this in all of our conversations. But this really comes back to the sort of three underlying thesises that we’ve laid out for you. So running on to the next slide, significant expense synergies.
Many mutual funds distribute capital gains right before the end of the calendar year. I guess, one is just to understand the cost synergies, capital efficiencies and some of the incremental revenue opportunities that you outlined. But with respect to the core organic growth and the Gain retail business, volumes in the past few or five years have been pretty challenged.
- It assumes, on the cost side, the full run rate of the current cuts that Gain has made during 2019, and it assumes the synergies from combining the two entities.
- And Sean, if I may just add to your point on the summary page there about opportunity, I think its key that people realize those are measured and post-close timing in months, not in years.
- For this reason, I believe that Booking will keep seeing robust reservations traction in hotels, cars, and restaurant tables.
- The next slide, I think we’ve covered most of this, but just sort of putting it down in metrics, I’ll take you through a more detailed buildup of the pro forma results here.
- And if you’re following along, I will skip by the disclaimer.
- So we’ve gone through that in some detail, and we’ll touch on it.
And I think our hope and desire is, by doing that, we will have a better and more attractive offering to the customers. That should allow us to grow our customers and potentially go for higher quality customers up the chain. And that we will make more from each customer because we have a broadened product offering. I mean, one of the reasons, I think that Gain didn’t go down the route in the U.S. of trying to set up an equity businesses. If you’re not a clearer, you don’t get a lot of economics out of using someone else. The economics are largely now driven by the clearers.
GAIN Capital Holdings EPS in-line, beats on revenue
Further information on INTL FCStone is available at So Gain was founded in 1999 with the intention of providing traders with low-cost access to foreign exchange market. So essentially, we were a single product on a single platform in a single market.
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And these are all instruments that we can clear. An ecosystem where there’s different complementary businesses from a customers’ perspective. They can deal with one entity and be able to be served on several levels. So as their taste and wants and needs change, we’re able to adapt to that much better now, being part of INTL, instead of being independent. So look, the industrial logic clearly makes sense as well.
If you look at the cost – the capital synergies on the next page, we are sitting with significant excess capital in some of our operating subsidiaries, particularly in London. And we will merge the Gain entity in there and make better use of that capital. And there’s also just some obvious synergies when you merge two businesses, you don’t need two buffers and things just kind of work better that way. Also, obviously, on the FCM side, we will just be merging that FCM into our FCM, and we have sufficient capital to carry that business.
And I think we weren’t part of a bigger system. So some of those opportunities get unlocked because of the transaction. And without it, maybe they don’t get unlock or they take longer to us. So I think ultimately, we consider it a fair opportunity and a fair deal.
And if you look on the far right, you can see the combined, what that looks like. You’ll see the little on the top left of that kind of Doughnut, the 21%, that’s really Gain’s retail business there. On the foreign exchange side, we have a foreign exchange prime brokerage business. But we do something like $2 billion a day in foreign exchange. When you combine those flows, you end up crossing more spreads, we combine prime brokerage arrangements, we end up lowering costs. So there’s a lot of potential synergies in just combining the flows, crossing spreads or using our infrastructure to enhance margins on their current business.
Results are interpreted as buy, sell or hold signals, each with numeric ratings and summarized with an overall percentage buy or sell rating. After each calculation the program assigns a Buy, Sell, or Hold value with the study, depending on where the price lies in reference to the common interpretation of the study. For example, a price above its moving average is generally considered an upward trend or a buy. Finally, the most significant reason I am willing to go long on Booking stock despite missing out on notable gains is that shares appear reasonably valued to this day. It’s very refreshing to see a company not trying to hide behind “Adjusted” figures while recognizing that SBC is a real expense.
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The combination of responsible capital allocation practices combined with a rapidly declining share count is certainly quite compelling. The question that arises now is whether Booking stock remains a good buy today despite trading near all-time high levels. I think the answer to this question is yes, in my view. Clearly, investing decisions should be driven by market analysis rather than personal preferences. https://bigbostrade.com/ For instance, even though I don’t smoke cigarettes, I hold shares in British American Tobacco p.l.c. (BTI) because I love its financials, hefty dividends, and overall upside prospects. Despite being on the right track in predicting Airbnb’s success, with its soaring revenues and profitability in recent years, it seems the market requires further long-term proof before the shares catch up.
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Nikolaos Sismanis holds a BSc in Banking and Finance and has over five years of experience as an equities analyst. He covers a variety of growth stocks and income stocks, including identifying those with the highest expected return potential, and a solid margin of safety. Sure, I regret missing out on Booking stock back in 2021 and the substantial gains that followed.
Gain Capital-INTL FCStone Merger Gets Shareholders’ Nod
The CVIX is obviously the volatility index relating to currencies, which is the key driver for the biggest part of their business. And that was certainly a big driver of the underperformance of Gain, particularly in the first quarter of 2019. So just to summarize on the next page, headed Transaction Rationale. I think we’ve covered some of this, but the most obvious thing is it increases our net operating revenue or the merged entity by 30%. We obviously increased our customer balances by $1 billion to $4 billion.
We don’t ever pay a lot of goodwill, and we want to make sure these transactions are accretive quickly to our shareholders. In this area, we have quite a good overlap with the Gain business. And we also deal with a lot of banks and financial institutions. We have video game stocks a lot of small broker-dealers and introducing brokers who effectively are aggregating retail for us. Obviously, now with the Gain acquisition, we have a digital platform that can facilitate that flow better. So that’s sort of the background to our business.