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OTC Markets Group: Network Effects, Scalability, And Optionality At Play Here

Aug. 02, 2022 1:00 AM ETOTC Markets Group Inc. (OTCM)2 Comments
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EG Capital


  • OTCM is a high-quality business that operates quietly and unnoticed in the background.
  • It has consistently grown revenue, earnings, and free cash flow over the years and has disciplined capital allocation.
  • It essentially operates as a quasi-monopoly and benefits from network effects, scalability, and embedded optionality.
  • Insiders own 42% of the company.

Financial Analyst Working on a Computer with Multi-Monitor Workstation with Real-Time Stocks, Commodities and Exchange Market Charts. Businessman Works in Investment Bank Downtown Office at Night.


Investment Thesis

OTC Markets Group (OTCQX:OTCM) represents an opportunity for investors to buy shares in a high-quality business that is uniquely positioned in the financial ecosystem. It essentially operates as a quasi-monopoly that benefits from network effects, scalability, and embedded

This article was written by

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Bargain hunter. Seeking under-valued, unrecognized, neglected, out of favor, or misunderstood situations where inherent value, a margin of safety, and the possibility of changing conditions create favorable investment opportunities.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in OTCM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Great article and summary on this serial, seemingly unknown compounder. I have added a bit recently at $55 for the reasons you stated. Certainly not cheap, but a fair price for a great company.
One thing that is difficult to ascertain is the amount of earnings and fcf they will make this year. Historically earnings a can be lumpy from year to year. I’m curious if earnings and fcf fall a little bit this year after the monster year they had last year. Even so, 17-21x fcf is a decent price to pay for the margins, roic, and dominant market niche they currently hold. Curious to get other’s takes on what earnings look like this year and next.
@JB5678 hands down otcm is my favorite company. Unfortunately the stock is a bit pricey so it’s only a small portion of my portfolio. I’ve owned it for 5 years or so. Well run and great moat. My quick take on earnings is the variable side of the business will struggle this year since retail trading volume has fallen. Retention and price increases should keep the corporate services growing slightly. I’m hoping a report of flat earnings will bring the price down some so I can load up on shares.
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