Investment Technology Group Inc. (ITG) filed Quarterly Report for the period ended 2009-09-30.
Investment Technology Group is one of the leading providers of technology-based equity trading services and transaction research to institutional investors and brokers. ITG's services help clients to access liquidity execute trades more efficiently and make better trading decisions. They offer a fully-integrated family of advanced trading services encompassing three business lines: POSIT Client-Site Trading Products and Electronic Trading Desk. Investment Technology Group Inc. has a market cap of $902.5 million; its shares were traded at around $20.71 with a P/E ratio of 10.7 and P/S ratio of 1.2. Investment Technology Group Inc. had an annual average earning growth of 8.2% over the past 10 years. GuruFocus rated Investment Technology Group Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:
In the third quarter of 2009, our consolidated revenues decreased 16% to $158.4 million relative to the third quarter of 2008 while our operating expenses decreased 9% to $130.4 million. Net income for the third quarter of 2009 was $17.5 million, or $0.40 per diluted share, as compared to $27.2 million, or $0.62 per diluted share in the third quarter of 2008. Our U.S. revenue was $114.6 million in the third quarter of 2009, declining $26.5 million or 19% compared to the third quarter of 2008.
The S&P 500 and NASDAQ Composite indices increased 15% and 16%, respectively, during the third quarter of 2009. The S&P 500 was still 9% below its September 30, 2008 level, but the NASDAQ Composite was actually 1% higher than the year-ago period. New flows into U.S.-based equity mutual funds were $2.7 billion in the third quarter of 2009 compared with net outflows of $52 billion in the third quarter of 2008, according to the Investment Company Institute. While the overall macroeconomic and business environment has stabilized, it continues to present a set of challenges to us both domestically and internationally.
In Canada, our revenues for the third quarter of 2009 were $15.7 million, decreasing $5.4 million or 26% from the comparable 2008 quarter. The revenue decline included the impact of the strengthening U.S. Dollar, which reduced revenues and pre-tax income by approximately $0.8 million and $0.2 million, respectively. Equity trading volume on the Toronto Stock Exchange (“TSX”) increased 10% in the third quarter of 2009 to 28.3 billion shares from 25.7 billion shares in the
Although European markets rallied during the third quarter of 2009, equity market values still remained below the comparable prior year levels. While the decline in market values did contribute to our commission revenue decrease (as trading commissions are generally based on the value of a customer trade, or ad valorem, within our European operation), commission revenues were most affected by the strengthening of the U.S. Dollar relative to the Pound Sterling, which reduced our commission revenues by $2.3 million while favorably affecting pre-tax income by $0.2 million during the third quarter compared to the prior year quarter.
Canadian commission and fee revenues decreased as a result of an unfavorable exchange rate impact and lower TSX volume in the segment of the market that forms our core client base. Electronic liquidity providers, which drove the 10% increase in overall TSX volume, are generally not a component of our client base. Excluding the estimated volume attributable to the TSX’s incentive program for these electronic liquidity providers, volume declined approximately 18%. Interlisted arbitrage trading, which accounts for most of our other revenues, generated $1.8 million in the third quarter of 2009, significantly down from the $4.4 million achieved in the comparable 2008 quarter due to a decrease in Canadian and U.S. interlisted trading volumes and an increase in competition in this area.
Overall, currency translation reduced total revenues and pre-tax income by $0.8 million and $0.2 million, respectively.
ITG is in the portfolios of Third Avenue Management, John Keeley of Keeley Fund Management.
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