Danesh RohintonTMX GroupX.TOWATCHJul 25, 2024

Quite bullish. Has done phenomenal job growing. Business is recurring and extremely sticky. Pullback is a buying opportunity. No structural issues. More Canadian IPOs would help. A valuation reset to take advantage of.

Hit his radar recently. Will work if you buy around these levels. PEG isn't 1, but still very good value. Painful to buy things when they're down, chart is scary, but there's upside.

It pulled back like all exchanges after the US announcement allowed futures trading in prediction markets. There is way too much gambling--it isn't investing. So, there is fear that this will take away some of the options trading from the TMX Group, which has a big options business. TMX trades at a cheap 20x. Exchanges aren't going anywhere. They have strong recurring revenue from infotech. This will grow double digits and raise dividends for many years. He is constantly adding shares.

It owns the Montreal exchange, other trading platforms and the software that supports them. It has a unique position in the financial industry. He considers it not a trading platform but a toll road. It made a recent acquisition of CBOE Canada and Australia. CBOE Canada is the only alternative trading platform not owned by TMX. The TSX and Venture own nearly 50 % of all mining listings in the world and the second largest is Australia. Together they are a mining powerhouse. It has been around since its IPO in 2003 at $3.50.          Buy 6  Hold 2  Sell 0

The basis of this company is, essentially, trading volumes. Increased trading volumes in March, up 33%. Heavy trading, lots of volatility, VIX over 30. Steady gainer over time. Also makes $$ off listings. Will probably use AI to its benefit.

Stock's grown by roughly 10% clip over last 10-20 years. If you own, definitely continue to hold.

He owns CME instead due to the bigger market there.

Simple business, often overlooked by investors. Compounded really nicely. Core operations of operating the exchanges are like a toll road. Benefits from increased volumes. During volatility, benefits from derivatives volumes increasing. 

The real story is in data analytics -- creating unique, niche benchmarks for ETF issuers and collecting index licensing fees. The company’s fastest-growing segment. Margin expansion. Yield is 1.89%.

The question was how will AI affect it. His answer was that AI should help it but only incrementally and not profoundly, and won't make major changes in its EPS profile. The quality is there but there is uncertainty in the capital markets. It is below its 200 day moving average so technically he wouldn't buy it.

Known as owner/operator of TSX. But through a string of acquisitions over 20 years, now a multi-segment business -- trading and clearing markets for equities, fixed income, and derivatives. Large and growing insights and analytics, with recurring revenue from fee-based subscriptions -- leading to higher margins and ROIC. 

Over last decade, 11% compound growth rate of dividends and 23% compound growth rate in total shareholder return. Pullback predicated on fears of AI disruption, but that risk is overdone. Yield is 2.04%.

The recent drop was due to fears of AI disruption. TMX's business is impossible for AI to take over. TMX has unique connections to all the various players in the market. Their listings business is doing very well given the strength in mining (gold and silver).

Tollbooth for Canadian capital markets. Valuation now more reasonable. Not cheap, but risk/reward is improving. Owns, and on her watchlist to add on further weakness. Record results reinforce conviction in the name.

Raised dividend, restarted share buybacks. Upside potential of 22% to target from here.

Results last week were very good, dividend increased. Not particularly exposed to a downturn in IPOs or equity issuance, but it's nice gravy when it does have a good quarter on those. Under pressure because one segment touches on software -- but the proprietary nature of data and strong network mean they're insulated from AI disruption.

Pullback is compelling opportunity for new investors.

Came out of the position in August, as it broke technically. Now trading around the 200-day MA. In financials, focus on where the strength is, and that's the large banks. Likes it long term as a data play. Tricky market backdrop, so be careful when you add.

Runs TSX and other trading platforms. Revenue not just from trading, but also from data analytics (42% of total revenue and growing double digits). Recent pullback (due to slowdown in new listings) hitting nice support level. Not a bad time to add. Derivatives trading delivered strong 27% growth YOY. Ranks 9/10, sees just over 25% upside from here.

Healthy balance sheet. Dividend is reliable. Yield is 1.74%.

Within the sector, all of the exchanges have been backing off over the last 3 months. He came out of this name partway through July. Below 200-day MA, and all MAs are moving lower. 70% of S&P companies have performed better over last 12 months. Laggard. Better opportunities.

We would be comfortable buying X today.
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