Author Topic: IBKR - Interactive Brokers  (Read 164297 times)

KCLarkin

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Re: IBKR - Interactive Brokers
« Reply #160 on: October 21, 2015, 01:32:36 PM »
I don't disagree with your logic. I am just curious how you are valuing it.

I am just using pretax as a quick rule of thumb. It is no bargain here, but when you compare to something like priceline it seems very reasonable.

I have a more complex model where it only looks 10% above 2010 and 2011 levels.


benhacker

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Re: IBKR - Interactive Brokers
« Reply #161 on: October 21, 2015, 03:59:00 PM »
Yeah, understand KC.  I have some beliefs about what premium to tangible book the franchise is likely, and could be worth.  I also have some rough thinking about global online brokerage profits, and what % IB can get in 5 or 10 years.  I also have some general guidelines about what Mr. P has done in terms of compounding since inception, and how that may be moderated due to his size, and also how it may increase given the business he is now in.

All together, think just about probabilities (rough numbers, don't have my notes in front of me):

1) Chance of a ~$10B premium to book being a bargain for Mr. P and the franchise in place (probably pretty good, but seems steep).

2) Chance that given the competitive dynamics at work and global brokerage structure IB will be able to grow to 10x their level of current profits? (probably good, maybe takes 15 years?  Could be earlier)

3) Downside if things don't work out well (maybe 50% down from here based on tangible equity value + modest premium)

4) Chance that it really goes sideways (close to zero in my mind).

Kind of just heuristics.

#2 is is what keeps me in the name (the potential to a $2, 3, 4B global brokerage powerhouse with economies of scale and low incremental capital for generating returns)... #1 and #3 are why I am not too scared to wait / hold.

I don't generally do explicit valuations (I look more in terms of expected returns from a long term hold which of course is essentially a transfer function of sorts of the same idea).  Not trying to hide a magic formula from you.... :)

Ben Hacker
Beaverton, Oregon - USA

KCLarkin

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Re: IBKR - Interactive Brokers
« Reply #162 on: October 21, 2015, 06:28:04 PM »
That's useful, thanks.

kab60

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Re: IBKR - Interactive Brokers
« Reply #163 on: October 22, 2015, 10:24:25 AM »
I think this sounds pretty good - I still haven't finished my account, but this might help people like me who wants 1 foot hurdles or atleast some extra bait. From CC:

"Just this past week, we came out with our latest periodic communique that summarizes the many improvements we have made to our systems during the past several months. The most significant one of these is the way we deal with applications for new accounts that we expect will increase our number of account openings. Until now, only about 35% of new account applicants actually completed their applications and funded their accounts.

With this new system, as soon as the applicant enters their username, password, and email address, we immediately send to them our trading platform with 15 minute delayed prices. They can populate the screens and set up optional fields the way they would want to use the actual account."

KCLarkin

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Re: IBKR - Interactive Brokers
« Reply #164 on: October 22, 2015, 11:56:08 AM »
i don't think the simulator will help conversions. I have an 8% position in this stock. Yet, I have started applications twice to open an account. i have never converted. The onboarding process is just too complicated.

The good news is they are growing 18% per year despite the 35% conversion.

Liberty

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Re: IBKR - Interactive Brokers
« Reply #165 on: October 22, 2015, 12:00:30 PM »
i don't think the simulator will help conversions. I have an 8% position in this stock. Yet, I have started applications twice to open an account. i have never converted. The onboarding process is just too complicated.

The good news is they are growing 18% per year despite the 35% conversion.

What is it that you found complicated? I don't remember it being harder than opening an account at TD Waterhouse or RBC Direct Investing (the other two that I've tried). I wonder if there's a difference between the process in Canada and the US... I'd guess it would be fairly similar, but maybe not.
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kab60

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Re: IBKR - Interactive Brokers
« Reply #166 on: October 22, 2015, 12:05:51 PM »
I don't think it will make a big difference by itself but at least they recognized there might be some low hanging fruit. I'm still surprised they haven't called me to ask why I got stuck but they probably checked my AUM and number of trades. :)

KCLarkin

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Re: IBKR - Interactive Brokers
« Reply #167 on: October 22, 2015, 12:23:04 PM »
I am in Canada. I have opened up numerous (maybe two dozen) accounts with BMO investorline, BMO Nesbitt Burns, TD, and etrade (now scotia). In their defense, my wife had hassles with BMO. Otherwise, I don't recall any issues with the others.

My current stumbling block: I need to prove my identity by having a notary or similar attest to my identity. Not a big deal, but automatically gets sent to the back of my long to do list.

The other concerns:
- selecting your real-time quote packages is crazy complicated. i don't know why they don't offer some basic package free based on your assets.
- other brokers reimburse transfer fees, I don't think IBKR does. On a per account basis, this isn't much but if you have multiple accounts, this is a real switching cost.

Liberty

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Re: IBKR - Interactive Brokers
« Reply #168 on: October 22, 2015, 12:30:01 PM »
Weird, I never had to prove my identity using a notary. Probably just did fairly standard stuff, but I can't remember exactly what it was. Are you an edge case on that front (non-citizen or something like that)?
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KCLarkin

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Re: IBKR - Interactive Brokers
« Reply #169 on: October 22, 2015, 01:07:26 PM »
Weird, I never had to prove my identity using a notary. Probably just did fairly standard stuff, but I can't remember exactly what it was. Are you an edge case on that front (non-citizen or something like that)?

All financial institutions need proof of identity. IBKR attempts to use some automated 3rd party service to verify identification (probably credit bureau). I failed, for whatever reason.