Good for everyone, not counting its shareholders
Over the recent period, there has been a real explosive growth in investment - due to the general covid isolation, brokers had to significantly improve their remote services for clients., including - to facilitate the opening and service of brokerage accounts, conducting operations with securities. This entailed something, that a huge number of newbie financiers appeared on the exchange. Some of them are determined to chase fashion promotions like Tesla and Virgin Galactic., someone got "under the hand" during events like the crackdown on GameStop shares. More advanced financiers might think about, how to get income on the general investment boom. It immediately recalls the times of the gold rush: not many of the gold diggers have found gold, but almost all businessmen, who traded in shovels, made a fortune.
Such "shovel dealers" during the investment boom, Certainly, are exchanges and Brokers. Prior to that, the pages of the Open Journal published a review of global exchanges and evaluated their investment attractiveness. In this article we will analyze, how presentable is the brokerage industry for a financier, taking as an example Interactive Brokers (IBKR). This foreign broker is more popular among Russian financiers, besides, its shares are traded on the St. Petersburg Stock Exchange.
Interactive Brokers Past Cash Performance Summary 5 years is shown in the figure 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
1-oe, what immediately turns out to be in sight: with a fairly impressive operating income margin, the net income margin is quite low. However, net profits have roughly doubled., first seen, that she hasn't actually changed. Low net income margins are reflected in relatively low ROEs. However, this does not prevent the company from being valued at approximately two,5 capital on the market.
IBKR is intensively conducting additional issues (the number of shares outstanding increased by approximately 30% over the past 5 years). The shares themselves are up approximately sixty-seven percent since the end 2016 G. However, earnings per share increased by seventy-four percent, the size of the dividend has remained constant over the past 5 years.
The share capital of the broker is rather curious.. According to the situation on 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 percent.
Fig. 3. Share capital structure of IBKR. A source: form 10-k Fig.3. Share capital structure of IBKR. A source: form 10-k
Maybe, that their holders receive a fair share of the net income of Interactive Brokers (seventy eight percent). Just take a look at the income statement below..
Fig. 4. A source: EDGAR Fig. 4. A source: EDGAR
Examining the sophisticated capital structure of IBKR, I am eager to note its similarity with the capital structure of VTB and Yandex.. It's time to remember the words, attributed to Peter Lynch: "The company could be great for everyone.: to guide, for clients, for the cabinet, for media representatives. However, with all this, it is not at all necessary that the company will be charming for the owners of the shares. ".
Most likely, Interactive Brokers lives up to this quote - the lion's share of net income comes from Noncontrolling interests.. But in general, shareholders can be happy (unblemished earnings and stock prices rose excellently over 5 years), however, dividend financiers, may be, Disappointed.