Thanks Gary. I liked that article too. Now here is some info from the Bull Market Report that is not so good.
Full Text of the BMR NewsFlash
The Bull Market Report - bull-market.com
NEWS FLASH - THE BULL MARKET REPORT - Knight-Trimark (NITE)
The markets are up nicely today and Knight-Trimark (NITE) is down. After
hitting a high of $81 earlier this year, it has come straight down to its
current level of $30 a share, but still up from its low of $2.25 set 12
months ago. Knight-Trimark is in the business of making markets in Nasdaq
and NYSE stocks by putting up their own capital to buy and sell shares and
creating the liquidity necessary for the major brokerage houses to trade
stocks. The firm has been wildly successful. We added the stock at $20
in February and generally have been pleased.
Knight Trimark is a great business. Starting just 5 years ago, it now
controls 20% of all Nasdaq trades, and 7% of NYSE trades. Historical
revenue growth has been 100% per year, with greater than 30% margins.
Knight was started by E*Trade, Discover, Ameritrade, and Waterhouse
Securities as a joint venture and these firms route trades to Knight
Trimark for execution. Trades take about 20 seconds to fill, whereas an
ECN can do it in less than a second. Sanford Bernstein in a recent
research report, estimates that the ECNs, primarily Archipelago, Island,
and Redi, will eventually capture 50% of all Nasdaq trades and 25% of NYSE
listed stocks.
But now we're worried. Their business is being attacked by the ECN's -
the Electronic Communication Networks, which are organizations designed to
put buyers together with sellers. Their costs are about 1/30th of NITE's.
We don't have time here to go into great depth about this new business -
we have done this before in The Bull Market Report, but suffice it to say
that unless NITE makes some changes, they are in jeopardy of losing their
entire franchise. There is no question that Knight-Trimark will continue
to increase market share, but their margins will be pushed lower by this
new competition. Even if they double in size, it is going to be hard to
increase profits in the future. We have said many times that the
president of the firm, Pasternak, is a genius and that he will be able to
pull his firm through and to lead the new world of stock market trading.
We still believe this to be the case. However, we would rather have our
money in Cisco (CSCO) and Global Crossing (GBLX), among others, instead of
waiting to see if Knight-Trimark is going to make it or not.
So, we hereby sell our position in Knight-Trimark, now trading at $30 a
share, locking in a profit of 50% in 8 months.
What should YOU do? That choice is up to you. You can hang with it and
hope for things to change - we're on Internet time, you know, or you can
sell it and move on. Please get some other professional advice before you
make a move, as there may be many other ways to look at this fine firm.
Todd Shaver
Editor in Chief
The Bull Market Report
Washington, DC
_______________________________________
End of their Newsflash and beginning of my own personal
comments
I have subscribed to the BMR for awhile now and have owned NITE before they were recommending it. Todd Shaver's publication has changed over the months, much the same as a mutual fund manager who has too many stocks in their portfiolio to be effective, I believe this is also happening to the BMR. Their philosphy has been to recommend buy and hold for the long term, solid growth companies and to look for potential gorillas in the making. I have seen this philosophy evolve and change into something else latley, and believe many others are noticing the same thing. Recent examples were how they flip-flopped on their newsflash about E-Trade a couple of months ago.
They had been touting E-Trade the same way as NITE and sent out a sudden newsflash to sell, were undunated with e-mails from angry sucsribers and flip-floped on the decision. You just have to wonder about Todd....perhaps he has bitten off more than he can chew at the moment. In this business you do not tout one week and sell the next, unless of course your philosophy is daytrading or short term trading. In any case I read their report for news about stocks and make up my own mind.
As to their clout in moving stocks, I believe that their following has diminished after a few such blunders and do not expect this news to have any real impact to NITE. |
