Virtu Financial – (NASDAQ:VIRT) – Sell or Short Recommendation – PT $21.25
October 13, 2015 ends the 180-day lockup period on Virtu Financial Inc. .
With the conclusion of the lockup period, the company's pre-IPO shareholders will have an opportunity to sell their own shares totaling over 15 million units, roughly equal the shares trading on the open forum (~16.5 million). This potential for a sharp increase in the stock available in the secondary market could result in a dramatic decrease in the stock price.
We previewed this event on our IPO Insights platform.
Business Summary: Provider of Market Making and Liquidity Services to the Global Financial Industry
Virtu Financial provides market making and liquidity services to the global financial industry through its technology platform that provides quotes to both buyers and sellers in commodities, equities, options, fixed income debt securities, currencies and other types on securities across a wide variety of exchanges, liquidity pools and markets.
Currently, Virtu Financial operates in over 225 exchanges, liquidity pools and markets worldwide by providing quotes on over 11,000 securities and other financial instruments. They provides services in North, South and Central America, Europe, the Middle East, Africa, and Asia and other Pacific countries.
The company notes in its SEC filings that it performs as a market neutral trading entity, which does not take positions on speculation. Virtu Financial seeks to mitigate the risks of long and short positions by earning small spreads on larger trading volumes. While not every trade results in a profit for the company, Virtu Financial result in a profit approximately 49 percent of the time, and the company has experienced only one losing trading day over a period of 1,485 trading days.
In fact, Virtu financial does not participate in high-risk principal investing, predictive momentum or signal trading that is highly automated. To minimize trading risks, its proprietary technology platform will freeze, or lockdown, the system if the risk management system detects any trading strategy outside its parameters. The company notes that this limits potential returns in volatile markets, although the approach is designed to produce consistent profitability.
