MarketAxxess was the first trade I made for the new year. Fundamentally the stock is still trading below its intrinsic value coupled with its strong economic moat. MarketAxxess’s business model is a good example of technological disruption to the traditional bond trading market.

MarketAxxess is one such company. Its technology disrupts the traditional bond trading in the secondary market. It is the first mover to introduce an online platform that links investors with bond traders, similar to online security trading, thus, extending the demand and supply equation globally with ease. The commission it earns from the facilitation of bond trading is a recurring income with ease of scalability without the need to incur more capitals. The first mover advantage is obviously a strong moat as competitors will have to incur huge capital outlay to develop similar trading platform. The growth of institutional investors has been tremendous over the last 10 years and MarketAxxess continue to dominate certain bond trading sectors with huge market shares.

why is paypal dropping after announcing the acquisition of pinterest? Not beneficial?

I would certainly look at what insiders, especially key executives, said to the media versus the status of their share holdings. For example, if the CEO continually to pitch the great potential or future of the company on one hand while consistently reducing his or her share ownership parallelly, i would definitely stay away from investing into this company. Not to mention whether the potential will be realized, the CEO’s ownership reduction action is a clear signal that the top gun does not believe in the future of the company.