COMPANY DESCRIPTION
BGC Partners is a brokerage company primarily servicing the wholesale financial and real estate markets, via its two segments: Financial Services, which provides brokerage of a range of products including fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commodities, futures and structured products, as well as a range of services including trade execution, broker-dealer services, clearing, processing, information, and other back office services; and Real Estate, which provides a range of services, including site selection, sales negations, occupancy projections, pricing recommendations, consultation, and consulting services.
ECONOMIC MOAT
BGC Partners has no economic moat and operates in a highly competitve marketplace. The firm relies on execution as a primary driver of success.
OUTLOOK
These shares hold decent total return potential out to the 2018-2020 stretch. The diversification of the business into real estate, as well as increasing margins in the financial services unit, should set the company on a path for steady growth over the next three to five years.
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STRENGTHS
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Strong management and execution abilities. BGC’s origins date back to 1945 when B. Gerald Cantor founded what became Cantor Fitzgerald
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Has 6,656 employees (2014)
WEAKNESSES
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Softer than expected operating results at times
THREATS
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Financial services and real estate can be quite volatile markets individually
OPPORTUNITIES
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Management has stated an interest in making further accretive acquisitions in the real estate field
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BGC continues to try to convert its voice and hybrid financial services desks to more-profitable fully electronic trading
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The company made a successful tender offer to acquire GFI Group
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
