Good for everyone, except for its shareholders
Recently, there has been a real investment boom - due to the general coronavirus isolation, brokers had to significantly improve their remote services for clients., in particular - to simplify the opening and maintenance of brokerage accounts, conducting operations with securities. This led to the fact that, that many new investors have appeared on the exchange. Some of them are determined to chase fashion stocks like Tesla and Virgin Galactic., someone got "under the hand" during events like the crackdown on GameStop shares. More advanced investors may want to consider, how to make money on the general investment boom. The times of the gold rushes are immediately reminded here.: few gold diggers have found gold, but many businessmen, shovel traders, made a fortune.
Such "shovel sellers" during the investment boom, obviously, are exchanges and Brokers. On the pages of the Open Journal, a review of world exchanges was previously published and their investment attractiveness was assessed. In this article we will analyze, how attractive the brokerage industry is for an investor, taking as an example Interactive Brokers (IBKR). This foreign broker is the most popular among Russian investors, in addition, its shares are traded on the St. Petersburg Stock Exchange.
A summary of Interactive Brokers' financial performance over the past five years is shown in the graphic below..
Rice. 1. Charts based on EDGAR data. Dividend history and schedule promotions - invtsting.com Rice. 1. Charts based on EDGAR data. Dividend history and stock chart - invtsting.com
First, what immediately catches your eye: with a fairly impressive operating profit margin, the net profit margin is quite low. Although net income has roughly doubled, at first it seems, that she practically did not change. Low net profit margin is reflected in relatively low ROE. But this does not prevent the company from being estimated at about 2,5 capital on the market.
IBKR is actively pursuing additional issues (the number of shares outstanding has increased by about a third over the past five years). The shares themselves rose in price by about 67% from the end 2016 G. Although earnings per share increased by 74%, the amount of the dividend has remained unchanged over the past five years.
The share capital of the broker is arranged quite interestingly. As of 25 February 2021 G. it is divided into 90 780 441 class A share and for 100 Class B shares.
Fig. 2. Cover of the 10-k form for 2021 year. A source: EDGAR Fig. 2. Cover of the 10-k form for 2021 year. A source: EDGAR
On these 100 Class B shares account for approximately 78% of votes.
Fig. 3. Share capital structure of IBKR. A source: form 10-k Fig.3. Share capital structure of IBKR. A source: form 10-k
Probably, that their holders receive an appropriate portion of Interactive Brokers' net income (78%). Just take a look at the income statement below.
Fig. 4. A source: EDGAR Fig. 4. A source: EDGAR
Analyzing IBKR's Intricate Capital Structure, I would like to immediately note its similarity with the capital structure of VTB and Yandex. It's right here to remember the words, attributed to Peter Lynch: "A company can be great for everyone.: for management, for clients, for the government, for journalists. But it is not at all necessary that the company will be great for shareholders. ".
Seems to be, Interactive Brokers lives up to this quote - the lion's share of the bottom line comes from Noncontrolling interests. However, in general, shareholders may be happy (net income and stock prices have risen well in five years), although dividend investors, maybe, Disappointed.