Chicago Board of Trade

Discussion in 'Stocks' started by Vinny1, Oct 17, 2005.

  1. Some thoughts of my thoughts on the CBOT IPO.

    -Uses Euronext Liffe's LIFFECONNECT for matching, not its own system
    -In 2003, Exchange fees accounted for 75% of revenue ($285mm); 2004, only 54% of revenue ($204mm)
    -Uses CME's CME/CBOT Common Clearing Link for clearinghouse
    -Clearinghouse fees increased from $1.158mm in 2003 to $73.556mm in 2004.
    -Clearinghouse house costs increased from $972m in 2003 to $54.755mm in 2004.
    -82% of all contracts cleared are for Financial derivatives …
    -CME is the largest US financial derivatives market
    2005 first-half net income was $39mm; annualized we will assume $78mm for fiscal 2005

    There is a float of 52mm shares and only 3.163mm have been offered to the public. *6.1% of float*

    EPS: $78mm/52mm = $1.5/share
    P/E 10/21: $126/$1.5 = 84

    There is a lockup on the stock for 6/12/18 months 1/3 of shares free to trade every 6 months.

    Compared with CME:

    -IPO issued 13% of float, BOT only issued 6% of float so the rest of those shared will be coming in 6 months.
    -CME makes money for clearing BOT's trades
    -Euronext Liffe makes money for matching BOT's trades
    - CME largest US financial derivatives exchange

    Here is the kicker though, CME with all 34.37mm shares outstanding is only trading at a p/e of 44.

    This is probably a decent short term "play," but watch your back long. Of course, I could be wrong and they could regain their lost market share…they are only the third largest options exchange in the us now!

    ;) I am a bull, but this is one I see being bought out or dying for lack of any particular CA!
    #31     Oct 24, 2005
  2. jsmooth


    interesting post Enfinity...

    ....i'm also long both CME and BOT but i'm nervous about the earnings of CME tomorrow...i wouldnt be a suprised to see profit taking on the news (good or bad).
    #32     Oct 24, 2005
  3. Nice call blow hard. Hope you weren't short.
    #33     Oct 24, 2005
  4. Another moron. How about up 150% in a week. Idiot. Go back and trade penny stocks.
    #34     Oct 24, 2005
  5. I'm up $42,000 at the moment.I'm so frickin happy!!!
    #35     Oct 24, 2005
  6. There is nothing wrong with taking your gains! I am always for taking a gain, even if it means that I left something on the table.

    CME is different than BOT though. CME makes money everytime that BOT commences a trade. If you look at the BOT prospectus you will see that exchange fees are dropped from $285mm in 03, to $204mm in 04. Meanwhile, clearing house fees went up from $0 in 02, to $1.1mm in 03, to $73.5mm in 04. BUT, if you look at the income statement there there is a clearing expense equal to about 2/3's of the clearinghouse revenues they generate.

    BOT Clearing expenses:
    02: $0
    03: $972m
    04: $54.755mm

    CME has CA in terms of market share and IP, BOT has basically nothing going for it long term.
    #36     Oct 24, 2005
  7. LOL

    I wasn't...but thanks for your concern.

    :D :p

    #37     Oct 24, 2005
  8. Hmmmm.....I wonder who super-ego is? I wonder.

    I think I may go back and do a search in my PM folder. Back to about '02 or '03 I think I seem to recall someone told me they use Super-ego as an alias at times.

    I wonder who that was?

    And to think I used to believe that you were an honorable guy. You'd fit right in on Capitol Hill.

    #38     Oct 24, 2005
  9. Pabst


    Honestly I don't get it either. I figured it would trade at P/E parity with CME but obviously there's something "hidden" here either in terms of income or going back to self clearing ect.
    #39     Oct 24, 2005
  10. ROFL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:D

    If the alias didn't prompt you I knew the Chicago thread would!
    #40     Oct 24, 2005