GCAP Gain Capital Holdings Stock Price
The second thing is, as you know, we’re made up of both the currency volatility measure, the CVIX and the general VIX and those can run in tandem or not. And so with that together, we look at our product mix too and sometimes our customers will, whether it’s a trend or whether it’s volatility, will be drawn to one set of products or another because they’re all in our platform and they’re all available. We’ll see our customers gravitate towards one or another and that will help drive it. I think the main take away here is that we’ve seen some — we’ve actually built in some improvements for the 12-month trailing, that’s the $106 kind of going from a $ $100 to $105, $102.5 up to $106.
- And we also want to make sure we have very short payback periods.
- So I’m not so sure that – so the sort of let’s just stay the way we are and wait for volatility to come back would necessarily be the best outcome for Gain shareholders.
- However, the volume per active increased 26% in Q as compared to the prior year period and 33% up quarter-over-quarter.
- As part of the transaction, INTL intends to make an offer at closing to repurchase GAIN’s $92 million convertible notes due 2022.
- We continue to view our Retail segment as the key driver of that business going forward.
Dan, another example, pretty clearly, you are aware that we own the web defining domain in Forex.com and INTL has got a better – extremely well-established global payments, cross-border global payments business. So it doesn’t take much a huge leap of faith to look at opportunities. The green diamond there is the one-year projection we have used, and we spent a lot of time with Gain coming to these projections. And then you can see the year two projection is that blue diamond.
Key Executives
That business, we get a lot of people very interested in that business because of its fintech nature and it has scaled very fast for us, is a pretty unique property. But at its core, it’s a foreign exchange business. We are providing a better foreign exchange execution than even the banks can. So that is a quick overview for those of you who are not familiar with FCStone side of the business. These would be buy-side institutions from the very largest in the world, all the way down to small hedge funds. These are obviously people looking to put money to work and want to access the markets to do that.
An ecosystem where there’s different complementary businesses from a customers’ perspective. They can deal with one entity and be able to be served on several levels. So as their taste and wants and needs change, we’re able to adapt to that much better now, being part of INTL, instead of being independent. So look, the industrial logic clearly makes sense as well. When you look at a lot of the opportunities for added synergies and cost savings and efficiencies globally, that’s laid out.
GAIN Capital Holdings misses by $0.04, misses on revenue
And we also deal with a lot of banks and financial institutions. We have a lot of small broker-dealers and introducing brokers who effectively are aggregating retail for us. Obviously, now with the Gain acquisition, we have a digital platform that can facilitate that flow better. So that’s sort of the background to our business.
Gain Capital October OTC trading increases 4% M/M
And then you can see, on a merged basis, what that does to holdco debt-to-EBITDA. Obviously, on the pure retail side, we do end up with some retail business in our network. A lot of it comes through brokers and aggregators, introducing brokers and aggregators, but we do have some pure retail business. Not a lot, obviously, Gain’s strengthens us a lot in that bottom row, as you can see, with the light blue parts of the Doughnut. Obviously, the other sort of part of the rationale is, as you’ve seen with Gain’s results, they had a pretty tough year last year. And if you looked at the slides, which I should have noticed when Glenn was presenting on Gain, they did have a slide there which stacked up the sort of annual revenues as well as the CVIX.
Business services
It allows more easy cross-selling and for clients to, in one place, access all we have to offer. And indeed, Gain provides for us a part of this digital platform that we need for a new customer base, which is really the retail side. In terms of the financing, we’ve received a commitment from Jefferies to provide the acquisition funding for this transaction. We have a commitment for $350 million in senior secured notes that we will issue. The pro forma leverage on a merged basis on a trailing 12-month basis will be 3.1 times the credit EBITDA. We are envisaging that once we merge these two businesses, we will be able to release around $100 million in capital, and we will use that to pay down leverage.
GCAP Stock Analysis – Frequently Asked Questions
The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.That is because GAIN Capital Holdings is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to earnings beat. This suggests that analysts have very recently bumped up their estimates for GAIN, giving the stock a Zacks Earnings ESP of +5.56% heading into earnings season. First of all, the market, whether or not was right or wrong, clearly didn’t recognize the value. We spent a fair amount of time trading below $4. And so it’s one thing to believe it, consider it and what have you, it’s another thing to be recognized for it.
This year, however, you sell a number of investments from your normal brokerage account to fund the down payment on a house, and those investments include $15,000 of capital gains. Those capital gains might push your AGI to $125,000—and could reduce the amount you can contribute to a Roth IRA that year, as it would push you into the “phase out” income range. Of course, there a number of factors that can impact your AGI other than capital gains. Certain investment accounts are exempt from capital gains tax or benefit from tax deferral.
This is critical to our ability to drive client acquisition, engagement and retention as evidenced by the large contribution that comes from our long-tenured clients. We will continue to enhance our market-leading suite of trading platforms and tools by continuing to develop our new HTML5 web trading platform, which was launched globally in the second half of 2018. Also, providing ongoing support for popular third-party platforms with a beta launch of MT5 expected in the first half of this year and delivering best-in-class decision-support capabilities that are seamlessly integrated into our trading experience.
Also, obviously, on the FCM side, we will just be merging that FCM into our FCM, and we have sufficient capital to carry that business. So in both instances, we can release a lot of capital – a lot of the Gain Capital out of their transaction and just better utilize the capital we have. I just like to mention, I mean, the credit people don’t really think about it this way, but we have a pretty large holdco revolver and have significant flexible –well not flexibly, undrawn capacity under that at the moment. It’s not sufficient to consummate this transaction, but we certainly will have a lot of liquidity post this transaction and anticipate a very fast deleveraging, both through utilizing our own cash on hand. And also, as we’ve indicated, we believe we can extract some capital out of the business once we merge the entities. The CVIX is obviously the volatility index relating to currencies, which is the key driver for the biggest part of their business.
We continue to view our Retail segment as the key driver of that business going forward. It’s worth noting that we achieved this growth in a year marked with significant political and economic uncertainty and overall relatively weak market conditions. These efforts c# backpropagation enabled us to deliver strong organic growth during 2018, with full year revenues increasing 29% as compared to 2017 and a full year EBITDA improvement of $58 million or nearly tripling, reflecting the operating leverage inherent in our business model.
Straight away, we can take a pretty bad environment for Gain, and we can turn that into an acceptably profitable result for us on a merged basis. I mean, one of the reasons, I think https://forexhero.info/ that Gain didn’t go down the route in the U.S. of trying to set up an equity businesses. If you’re not a clearer, you don’t get a lot of economics out of using someone else.
In addition, because we are clearer, we end up with client balances in our system, either through the clearing or the custody of assets. Gain brings to us $1 billion roughly of customer float. We have margin accounts in our system and so on. We’re about just over 2,000 people headquartered out of New York.
It’s not just a blanket, hey, spend $20 million more, which market is showing the best use of that additional spend. So I think what’s important, Rich, on the takeaway here is that very similar to maybe a discount equity broker model where you have a cost of acquisition and then you have the lifetime value of a client. In the past, we have illustrated our example of we had acquisition costs and then we have a lifetime value of a client based on their transaction volume over time. And what we’ve used is a three year time value because the 3-year value is very representative of our client’s relationship with us. However, we’ve also alluded to the fact that we have a big chunk of customers, over 50% that are longer tenured than that. And so arguably, that’s a conservative measure because it doesn’t stop at three years, we have quite a few clients participating and contributing after three years.
And then just on the – you’ve been – Gain has been working to reduce the volatility in its RPM and overall revenues for that matter. And is there anything about joining INTL that could help accelerate the initiative? I know you outlined the total company volatility in revenues, but I’m just – with respect to Gain specifically. And as a result, I guess, one of the issues I’m sure they were thinking about is it’s become a small monoline business with a fair degree of volatility.
We have a very big business in executing and clearing for professional traders on the exchanges. We have a very big market share in this business. And through Daniels, Gain has a very similar business. So what we believe is just through the straight cost synergies by putting these two companies together, we can take even the worst results that Gain has produced in a long time in 2019. And we can make those results acceptable just through straight cost cuts, just eliminating the costs related to being a public company. So we’ve gone through that in some detail, and we’ll touch on it.