John O'Connell, CFAMontréal ExchangeMXX.TODON'T BUYMay 29, 2007
Have a friendly agreement with the TSX (X-T), which will expire in 2009. This will become a kind of derivative and stock market. Some big competitive issues.
Is going to be taken out by the Toronto stock exchange. Is more expensive then the Toronto. Thought the valuation is too high.
Suggests buying TSX instead.
(A Top Pick Oct 24/07. Up 18.6%.) Talks between Montreal and TSX had looked like they had stalled very badly last summer but looks like it is proceeding now. Going forward, the TSX (X-T) is the better bet.
A backdoor way to play the US options business. They have the market cap to do it. Montreal should give itself more options then just Toronto. Will make themselves a serious key player by making acquisitions in the US options market.
Smart Money would say that there would be one public exchange in Canada. A 2 to 3 year hold will make you some money. You might want to wait for some weakness.
Long-term outlook for this exchange is wonderful. Specialize in the derivatives market, which is a growing market. Investors have exaggerated current price. In the long term, it's a great one to one.