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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Hands Off who wrote (15732)	3/6/1999 10:55:00 PM
From: puborectalis	Respond to of 90042

Great article in Barrons this weekend on NITE>.................Barron's part 1 by: floridatrader 4732 of 4751 It is a very long article but for those who do not have access, I am sure this is better than buying the paper just for 1 article. Sorry too much work to line up the whole article neatly: March 8, 1999 Plugged In Yes, Knight/Trimark Profits by Trading 'Net Stocks, But the Question Is: Does It Profit Too Much? By BILL ALPERT The nation's legions of online traders have made Amazon.com and Yahoo into giddy stocks. Day traders have also made a great business for Knight/Trimark Group, the market-maker executing more than 15% of trades in Internet stocks. Online traders may not know that their orders to brokers such as ETrade and Ameritrade get passed along to Knight/Trimark's computerized trade stations in Jersey City, New Jersey. But in barely four years, Knight/Trimark has become the world's largest market maker, handling the orders of heavily advertised brokers like ETrade and Discover Brokerage Direct. As those brokers have grown, so has Knight/Trimark. It's a lot like the relationship between online retailers and FedEx. Many of the Internet's businesses have yet to show profits. Not so with Knight. The firm has made lush profits, and its stock has shot from an October '98 price of $4 to $64, and more recently it has been trading at about $40. Two weeks ago, Knight/Trimark completed a secondary stock offering of nine million shares at $35 each. In all, 6.6 million of those shares were sold by brokers like E*Trade that originally established Knight/Trimark to do their market-making. Knight/Trimark's own shares have thrived on Nasdaq, says Chief Executive Kenneth D. Pasternak, "because we have revenue growth, margin growth and earnings growth and because we're associated with the Internet." As the Wall Street "face" of seemingly mad online investors, Pasternak's firm makes some more traditional brokers mad, too. Not only has Knight garnered 15% of all the trading volume on the Nasdaq Stock market, blowing past market-makers like Charles Schwab's Mash Institutional or Herzog Heine Geduld, but investment bankers blame Knight/Trimark for disorderly and delayed opening trades in many recent new issues. With crammed queues of online customers ready to pay any market price to get new "dot.com" stocks, Knight/Trimark has snarled trading in ways that suggest to some brokers that the firm is enriching itself at other people's expense, including its own customers. "That's pure poppycock," says Pasternak. The opening day crush for new issues is an industry problem, he says, plaguing all traders. Knight and similar market makers are just processing transactions for individual investors who think Internet stocks are worth more than do Wall Street's pros, Pasternak argues. Posted: Mar 6 1999 6:08PM EST as a reply to: Msg 4726 by floridatrader