[June Stock Pick] Trade Alert: I Just Added a New Position

A boring middleman that prints when markets panic, and I just bought it this morning.

This morning I bought a new position. It’s a misunderstood middle-market financial firm that most people misread as a thin-margin commodity trader. It books around +$100B of pass-through revenue, so it screens ugly, but the number that actually matters, its real top line, has compounded close to 20% a year for five years.

It earns more when markets get volatile, which makes it a rare thing: a hedge that also compounds. It just posted back-to-back record quarters with a return on equity north of 20%. It recently became the largest player of its kind in the US after a major acquisition. And it throws off FCF worth a mid-single-digit yield against, mostly retained and reinvested at a 20%-plus return. My DCF base case sits +50% above where I bought it this morning.

That’s the shape of it. A boring-looking business, a cash machine underneath, and a market that still files it under the wrong category.

The ticker, my exact entry, the trade ticket, the full thesis and my DCF target are below the line for paid subscribers.

Paid subscribers have ridden calls like DELL (+217%), Micron / MU (+213%), NGD (+86%, taken out in a buyout) and ODC (+57%). Not every pick works, and the full record with the misses is right here, but the winners have carried the book.