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Strategies & Market Trends : Disciplined Investing, especially the NAIC way -- Ignore unavailable to you. Want to Upgrade?

To: - with a K who wrote (351)	7/14/2002 8:21:28 PM
From: - with a K	Respond to of 469

Investment Technology Group (ITG) looks interesting to me as a long. I would appreciate any comments of feedback. The SSG comes out a "Buy" using only 13.9% EPS growth projections (vs. VL's 21%) and ave. high PE of 26.5 (eliminating 1999's PE). I used a low price of $19.26, the forecast low. It shows an up/down of 5.3 to 1 and annual appreciation of 22.5%. I use a 25-50-25 zone. For some reason VL shows ITG paid a dividend in 1999 of $2.67 but has not for any other years. (?) Other aspects I like about the stock at this price: Low PEG and projected PE; excellent profit margins and ROE (although declining somewhat since 1999); nice ROI; no debt; cash flow positive; 5 yr. EPS growth of 28% (VL); Markt. Cap of $1.6 bil; Morningstar Grades: A, A+, A+; announced more stock to be repurchased in June; VL gives it a "2" rating. Snips from VIC report Oct. 2000: ITG is an electronic trading firm whose primary asset is the Posit matching system, also called "the match". Posit is a growing source of liquidity for professional money managers. At a specified time each hour of the trading day, investors can place a buy or a sell order into Posit. If someone has placed the other side of the trade into Posit, the trade will occur midway between the bid and the ask. If there is no one on the other side of the trade, the order is canceled. It is a very useful method to purchase blocks of illiquid stocks without moving the market and also a way to protect identity or size in a stock. ITG has other related operations, but I believe that ownership of this asset is the basis for an investment in the company. Posit Historical Numbers Average Year Over Year Daily Volume Growth 1993 6.2mn 1994 7.6mn 23% 1995 8.9mn 17% 1996 13.2mn 48% 1997 14.5mn 10% 1998 23.2mn 60% 1999 25.7mn 11% 2000 32.4mn 26% What makes Posit Attractive 1. Historic growth in Posit (see above.) 2. Posit will experience a positive "network effect". As volume grows in Posit it makes Posit a more useful tool for other investors, fueling growth along. This effect has been overused recently in the investment world as a reason to purchase many internet companies where it didn't truly exist, but it truly makes sense here. As sources of liquidity grow, they become more important to the investor. 3. Posit is a superior way to trade for most institutional investors, because it is anonymous and it does not reveal position or order size to anyone (brokers or other side) in the process. It may not be optimal for someone who specializes in trading blocks at discount, but for the majority of investors, the ability not to reveal identity or size is very valuable. It not only trades at a fair price, but much more than other ECN's, Posit is designed to get size done.