24/7 Wall St. » SWIM

Niche Trading Firm Mergers Not Dead (AMTD, SWIM, OXPS, TRAD)

247wallst — Thu, 08 Jan 2009 09:18:06 +0000

It seems that the appetite for online brokerage firms to do selective M&A deals is not entirely dead. TD Ameritrade (NASDAQ: AMTD) has announced this morning that it is acquiring much smaller thinkorswim Group Inc. (NASDAQ: SWIM). It is paying a hefty premium of $606 million for the company, but you also have to consider what the larger firm is getting for the acquisition.

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

Posted in Brokerage Firms, Mergers and Buy Outs Tagged: AMTD, OXPS, SWIM, TRAD

Companies Not On SEC Short Sale Ban, But Should Be

247wallst — Fri, 19 Sep 2008 13:07:21 +0000

Frankly, we think the ban on short sales is not the right way to run a free market. But it doesn’t matter what we think. These are the new rules, but they do not always make sense. Consider the stocks listed below that have many of the same issues as the financial companies but did not make the SEC’s list.

American Capital, Ltd. (NASDAQ: ACAS)
American Express (NYSE: AXP)
Capital One (NYSE: COF)
CIT Group (NYSE: CIT)
First Marblehead Corp. (NYSE: FMD)
General Electric (NYSE: GE)
General Motors (NYSE: GM)
HSBC Holdings PLC (NYSE: HBC)
thinkorswim Group Inc. (NASDAQ: SWIM)
VeriFone Holdings (NYSE: PAY)
WisdomTree Investments (OTC-WSDT)

There are many others that could be included. We refrained from going into detail for the case on each of these, but if you see the companies are tied into the financial markets it should be fairly evident why they were named. There are also some on this list which didn’t look likefinancial firms whose stocks were down because of targeted shortselling. That’s what makes a horse race. The SEC has referred to such companies as an "Included Financial Firm", and you can see the full list of them herefrom the SEC.

It is possible that some of these companies have already been added to the list. We just haven’t seen them.

Jon C. Ogg
September 19, 2008

Posted in Regulation, Short Interest Tagged: ACAS, AXP, CIT, COF, FMD, GE, GM, HBC, PAY, SWIM, WSDT

Investools Hit By Double Whammy (SWIM)

247wallst — Fri, 02 May 2008 07:42:51 +0000

Investools Inc. (NASDAQ: SWIM) is under serious fire this morning from traders. The company posted net income of $0.17 EPS, but First Call was at $0.21 EPS. This is on a record revenue with a gain of 39% to $91 million.

A miss on earnings is one thing, but this disclosure is something different entirely:

"The Company is cooperating with a non-public, informal inquiry by the SEC relating to representations by certain presenters in certain portions of their presentations at some of the Company’s seminars. The Company has been cooperating with and intends to continue to cooperate with the SEC. Because it is ongoing, the Company cannot predict the outcome of this informal inquiry at this time, and, as a result, no conclusion can be reached as to what impact, if any, this inquiry may have on the Company or its operations."

This stock rose exponentially over the last 4 and a half years and had gone more range bound over the last year-plus. An SEC inquiry after a miss is not going to be welcomed by any stretch of the imagination.

Shares closed at $12.48 and the 52-week trading range is $9.29 to $18.23. Unfortunately, that was the 52-week trading range. Shares are now down almost 35% pre-market at $8.20 on very active volume of more than 500,000 with an hour to the open.

Depending on what these position claims are, this will either end up with a slap on the wrist… or a kick in the you know where. So far traders are kicking.

Jon C. Ogg
May 2, 2008

Investools Files Shelf Registration (SWIM)

247wallst — Fri, 28 Mar 2008 16:31:22 +0000

Investools Inc. (NASDAQ: SWIM) has filed to sell up to 3,083,178 shares of common stock in an open shelf registration. None of the shares are going to the company as this was filed on behalf of the selling shareholders that were the owners of thinkorswim. This will allow the thinkorswim owners to sell any, all, or none of the shares if they so choose.

At today’s prices, this would represent north of $33 million. Investools market cap is $730 million. At $11.06 and a $9.29 to $18.23 trading range, this offering is just a small drop in the bucket.

We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.