OptionsExpress was not acquired for a huge premium despite the $1 billion price tag. In a 1.02 share swap, the value was $17.91 before the effects of price changes in the shares.  With Schwab shares at $17.76 this morning, the implied value would be closer to $18.10 for OptionsExpress.  A month ago it was said that OptionsExpress had 385,200 customer accounts and about $8.1 billion in total client assets either in positions or on deposit.

The deal is long after the TD AMERITRADE Holding Corp. (NASDAQ: AMTD) acquisition of ThinkorSwim for some $606 million.  This was one of those deals that sort of got the value track going again in options, but we can’t omit the deal where Citadel tied up so much of the options business of E*TRADE Financial Corporation (NASDAQ: ETFC).

Perhaps even more important is that the recent IPO from CBOE Holdings, Inc. (NASDAQ: CBOE) leaves the exchange stock as perhaps “The Last Man Standing” if the NYSE Euronext, Inc. (NYSE: NYX) merges with either Deutsche Boerse or if NASDAQ OMX Group (NASDAQ: NDAQ) makes that rumored rival bid.  It is still unsure whether or no the U.S. regulators will even allow the NYSE to be mostly foreign-owned or not.

The deal from Schwab for OptionsXpress makes sense.  While it sounds expensive at almost $2,600.00 per account, the true die-hard options traders tend to be more active traders and tend to have more assets at other firms.  This may allow for much cross-selling opportunities for Schwab to gather up more accounts from more active and advanced traders.

Schwab has seen a 52-week trading range of $12.64 to $19.95 and OptionsXpress has seen a 52-week range of $13.86 to $21.07.  So far, the April and May options expirations in the $17.50 strike prices are not indicating that a higher premium buyout is coming either from Schwab or from another buyer.

We are not going to look at the currency-brokers because they often have many accounts funded with very small dollar amounts.  Some other firms which are specialty brokerage firms are as follows:

MarketAxess Holdings Inc. (NASDAQ: MKTX) is a firm specializing in electronic trading of corporate bonds and other fixed-income assets and its market cap is $845 million with a $22.44 price and a 52-week range of $12.27 to $22.49.

Interactive Brokers Group, Inc (NASDAQ: IBKR) allows its clients to trade multiple securities classes and it seems to have a broader cross-border scope than many of its peers. At $15.99, it has a market cap of $675 million and a 52-week trading range of $15.23 to $19.49.

TradeStation Group Inc. (NASDAQ: TRAD) caters to more of the professional and active trading crowd and caters to stock, options, futures and more.  With shares at $7.08, its market cap is $277 million and its 52-week trading range is $5.22 to $8.46.

There is value in the higher volume and higher trading activity accounts again.  At least so it seems.  There may be more consolidation ahead in the specialty online brokerage firms.

JON C. OGG

Amgen, Inc. (NASDAQ: AMBC) is up more than 5% premarket to $56.79, relative to a 52-week range of $50, after recent succesful trials of a cancer drug.

Genoptix, Inc. (NASDAQ: GXDX) has made major gains this morning, up 16.8% to $21.00, relative to a sizeable 52-week range of $13.51- $39.00. The company recently announced it would be selling itself at auction.

optionsXpress Holdings, Inc. (OXPS) is down more than 13% to $17.28 this morning on no major news. Shares of OXPS are trading within a range of $14.12-$21.07.

The dividend is payable on December 27, 2010 to shareholders of record on December 13, 2010, which will assure that the payout falls under the lower dividend tax rates for 2010.

The company has returned over $100 million to shareholders through buybacks and dividends since the beginning of 2008.  The company said that a current lack of immediate value-creating acquisition opportunities and the potential increase of dividend tax rates in 2011 were part of the reason behind the move.

Cash and investments for the period ended September 30, 2010 were approximately $269 million.  The leverage portion comes from it having secured a $120 million four-year variable rate term loan to cover a portion of the dividend payout with the remainder to be funded by available cash.  After taking into account the impact of the transactions, it would still have over $125 million in company cash and investments.

Shares closed Friday at $16.93 and its market cap is roughly $972 million.  The 52-week trading range is $13.85 to $18.23.  If you were using simple math, this special one-time dividend would equate to a 26.5% payout.

JON C. OGG

Chico’s FAS Inc. (NYSE: CHS) Started as Neutral at Janney Capital Markets (late Monday).
Duke Energy Corporation (NYSE: DUK) Cut to Hold at Citigroup.
Eldorado Gold Corp. (NYSE: EGO) Cut to Sector Perform at National Bank.
Kinross Gold Corp. (NYSE: KGC) Raised To Outperform at National Bank.
National Bank of Greece SA (NYSE: NBG) Cut to Strong Sell at S&P Equity Research.
OpenTable, Inc. (NASDAQ: OPEN) Cut to Hold at Stifel Nicolaus.
OptionsXpress Holdings, Inc. (NASDAQ: OXPS) Cut to Underperform at Macquarie.
Pepco Holdings, Inc. (NYSE: POM) Cut to Market Perform at Wells Fargo.
Semtech Corp. (NASDAQ: SMTC) Reiterated Buy and $22.50 Target at Gleacher.
TradeStation Group Inc. (NASDAQ: TRAD) Raised to Outperform at Macquarie.
Urban Outfitters Inc. (NASDAQ: URBN) Started as Buy at Janney Capital Markets (late Monday).

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Jon C. Ogg
July 27, 2009

The acquisition price may fluctuate as this is technically a cash andstock deal, but the $3.34 in cash and 0.398 shares of AMTD per SWIMshare gives an implied value of about $8.70 based upon the AMTD closeof $13.48.  Ameritrade shares are down on the report so that $8.70implied price will be adjusted lower.

This will give Ameritrade a larger retail options presence.  Ameritradeis targeting a 3% to 7% profit boost next year as a result of the dealwith a target of an additional 10% or more growth to annual earnings. If you look as of the end of September, thinkorswim had $380 million in trailing 12-month revenues and $87 million in pre-tax income that it generated from roughly 87,000 ‘funded’ retail brokerage accounts and more than $3 billion in client assets.

If you are looking for other niche plays that other brokerage firmsmight want to consider in sympathy, there are two firmswhich come to mind.  Those companies are optionsXpress Holdings, Inc.(NASDAQ: OXPS) and TradeStation Group Inc. (NASDAQ: TRAD).  Just keepin mind that the ability for these deals to come about did not evencome during good times, and brokerage firms are doing far more thanjust pinching their pennies today.

thinkorswim shares are trading up roughly 40% to $7.94 on the deal.

Jon C. Ogg
January 8, 2009

• eHealth (NASDAQ: EHTH) Raised to Perform from Underperform at Oppenheimer.
• F5 Networks (NASDAQ: FFIV) Started as Buy at Pacific Growth.
• Foundry Networks (NASDAQ: FDRY) Started as Buy at Pacific Growth.
• Lennar (NYSE: LEN) Raised to Neutral from Sell at UBS.
• OptionsXpress (NASDAQ: OXPS) Started as Market Outperform at JMP Securities.
• Schering-Plough (NYSE: SGP) Raised to Overweight from Equal-weight at Lehman Brothers.
• Third Wave (NASDAQ: TWTI) Cut to Hold from Buy at Deutsche Bank.

Jon C. Ogg
July 15, 2008

• ArvinMeritor (NYSE: ARM) Raised to Buy From Neutral at Goldman Sachs.
• BTU International (NASDAQ: BTUI) Started as Overweight at Thomas Weisel.
• Callaway Golf (NYSE: ELY) Started as Outperform at Raymond James.
• Coca-Cola Company (NYSE: KO) Raised to Buy from Hold at Deutsche Bank.
• Intel (NASDAQ: INTC) Started as Buy at ThinkPanmure.
• JA Solar (NASDAQ: JASO) Started as Buy at Broadpoint.
• Kellogg (NYSE: K) Raised to Overweight from Neutral at JPMorgan.
• Lehman (NYSE: LEH) Cut to Market Perform from Outperform as Wachovia.
• Omnicare (NYSE: OCR) Raised to Outperform from Perform at Oppenheimer.
• optionsXpress (NASDAQ: OXPS) Raised to Neutral from Sell at Merriman Curhan Ford.

Jon C. Ogg
June 10, 2008

• Arch Coal (NYSE: ACI) raised to Overweight at JPMorgan.
• Bankrate (NASDAQ: RATE) downgraded to Hold at Jefferies.
• Barnes & Noble (NYSE: BKS) downgraded to Neutral at JPMorgan.
• Goldman Sachs (NYSE: GS) downgraded to Market Perform at Oppenheimer.
• Hasbro (NYSE: HAS) raised to Buy at Banc of America.
• Mosaic (NYSE: MOS) raised to Buy at Citigroup.
• OptionsXpress (NASDAQ: OXPS) started as Sell at Merriman Curhan Ford.
• Potash (NYSE: POT) raised to Buy at Citigroup
• SiRF Tech (NASDAQ: SIRF) downgraded across the board: Jefferies, Lehman, Oppenheimer.
• Yahoo! (NASDAQ: YHOO) raised to Buy at Canaccord Adams; downgraded to Neutral at Banc of America.

Jon C. Ogg
February 5, 2008

Scottrade                    29%

Schwab  (SCHW)         23%

TDAmeritrade (AMTD)   23%

E*Trade (ETFC)            10%

Zecco                           8%

TradeKing                     4%

OptionsXpress (OXPS)   4%

Perhaps problems at E*Trade are catching up to it in the court of public opinion.

Douglas A. McIntyre