Q: Help me understand what the 2or3 key reasons are, to continue holding ECN, in addition to economic recovery and lower interest rates. Is economic recovery and lower interest rates the dominant reason to continue holding ECN? In your experience looking at a companies whose business was similar to ECN, how long will it be to see a share price response, to these reasons, if properly executed?
5i Research Answer:
While the stock has disappointed recently, investors forget the very large dividend paid two years ago. The main reason is management. They have founded, grown and sold numerous companies over the past few decades, and have extensive financing experience. Another reason is market share potential.. The areas ECN tend to be largely ignored by banks, moreso when banks are worried about economic conditions. This creates opportunity to small and nimble players who can move fast and manage credit risk properly. In terms of time frame, it may take a while for earnings to turn, but we do think if rates peak investors will start paying more attention to the stock, especially with the new capital infusion giving the opportunity for faster growth.