Re: Barron's on NITE from Yahoo...
Anybody Read Baron's???
by: bob_hop (36/M/Orange, CA)
59813 of 59814
Not sure if everyone read this as I do see many posts refering to this week's Baron's article, sorry if this is a
repeat. Article mentioned Fidelity, DLJ, SCH, & Spear and discussed ECNs also even quoted Kenny P.
Here are the last 5 paragraphs of the article, please forgive the typos. All in all think article was semi-bullish
for NITE. Note, I added some comments and these are in parenthesis.
"....One brainteaser is how all this will effect Knight/Trimark Group,, the Jersey City firm that ahs
quicklygrwon into Nasdaq's largest market maker by processing trades of online brokers. While shares of
E-Trade and Ameritrade change hands at frighteningly triple-digit multiples, the stock of solidly profitable
Knight/Trimark have an earnings multiple of just 30, which seem stingy in light of the firm's 300% annual
growth rate.
So why have NITE's shares slid 10% in the last week, to around 49? In reporting June quarter sales growth
of 35% over March '99, on Wednesday Knight warned that such quarter-over-quarter growth might slow to
5-10%.
Four million NITE shares have been sold short - a chunk equaling 25(???? Barons has a wrong # here) times
the stock's average daily trading volume. The doubters say that ECNs will narrow the profits of the Street's
traditional middlemen like NITE. But with electronic order handling, trading volume will soar, even if
order-handling margins shrink. Instinet CEO Doug Atkin says that should enable efficient market makers to
grow their profits as the pie grows. (efficient sounds like NITE to me)
While NITE's chief executive Kenneth Pasternak acknowledges the challenge posed by ECNs and
potentially NASDAQ itself, he says losing business in the 50 Nasdaq largest stocks would harly be terminal.
"The top 50 are not unimportant to us, but they aer the least profitable part of our business" he says (yeah for
OTCBB trading if u ask me). The vast majority of Nasdaq issues, he adds, are thinnly traded and will never
trade efficiently without market makers who use their own capital to keep the ball rolling.
Other memebers of the old guard, however, may not be so lucky. Just as the abandonment of fixed
commisions on Wall Street a generation ago opened the door for the discount brokers and slammed it on
firms that were slow to adapt, so too will the move to electronic trading create new winners and losers." |
