Interactive Brokers Group, Inc. (IBKR): Greenhaven Road Capital Bullish On It

Greenhaven Road Capital is bullish on Interactive Brokers Group, Inc. (NASDAQ:IBKR), a Connecticut-based electronic brokerage firm. In its Q4 investor letter, the hedge fund discussed IBKR along with other top positions; we’ve already covered Etsy Inc. In this article we’re going to take a look at the fund’s viewpoint on Interactive Brokers Group.

Here is what Greenhaven said about the electronic brokerage firm in the letter:

Interactive Brokers (IBKR) – As a customer and long-time shareholder, Interactive Brokers occupies a portion of the Greenhaven Road portfolio that I hope Greenhaven Road occupies in your portfolio – buy, hold, and forget about. Yes, I look at the monthly metrics and listen to the conference calls and buy shares on large declines, but the best thing we can do here is absolutely nothing.

The quality of management is well into the top 1% of teams we have seen, incentives are aligned with 75%+ insider ownership, there is a very long runway for growth with no additional capital, the value proposition to customers is excellent. Interactive Brokers came back into the top 5 of the portfolio through a combination of price appreciation and share purchases.

The company continues to add new accounts at a 20%+ per year clip. If and when volatility increases and trading volumes increase, Interactive Brokers will benefit. Until investors want to pay higher commissions and higher interest rates on margin portfolios, being the low-cost provider with scale presents Interactive Brokers with a tremendous ongoing opportunity.

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Interactive Brokers Group, Inc. (NASDAQ:IBKR) is a $28-billion market cap automated global electronic broker and market maker. It brokers stocks, options, futures, EFPs, futures options, forex, bonds, funds and CFDs.

For the fourth quarter of 2017, IBKR reported a $0.02 loss per share, versus a $0.05 loss per share for the same period in 2016, due to the Tax Cuts and Jobs Act which decreased the company’s earnings by $0.45 per share. It had net revenues of $515 million and income before income taxes of 364 million for the quarter, versus net revenues of $193 million and income before income taxes of $28 million for the same period in 2016. For the year ended December 31, earnings per share were $1.22, versus $1.19 per share in 2016. Net revenues were $1.70 billion and income before income taxes was $1.04 billion for 2017, versus net revenues of $1.40 billion and income of $761 million in 2016.

On the share market, Interactive Brokers Group has been delivering a solid performance so far this year – and for the past 12 months. The stock has moved up more than 17% since the beginning of the year, while gaining 81.55% over the past 12 months.

Meanwhile, a number of hedge funds in Insider Monkey’s database also see value in Interactive Brokers Group, Inc. (NASDAQ:IBKR). As of the end of the third quarter of 2017, there were 25 funds in our database with positions in the company, including Ancient Art (Teton Capital), Bares Capital Management, and Guardian Point Capital.