Online brokerage TD Ameritrade (AMTD) reported its best quarter ever Thursday, however in the wake of lower trading activity the stock is down nearly 7% in the last month. We've hit Dow 14,000. So why aren't retail investors trading more? TD Ameritrade Chief Executive Joe Moglia offers some perspective.
Following are excerpts of Fast Money’s interview with TD Ameritrade (AMTD) Chief Executive Joe Moglia.
Are trading revenues weak?
“The fact is, while (trading revenues) might not be as good as they were a year ago we’ve seen a reasonable pick-up over the span of the last couple of weeks,” replies Moglia.
How much of a lag is there between positive market performance and trading activity - and how optimistic are you about the second half of the year?
“I think that the lag probably takes about 6 weeks but it is a gradual thing,” says Moglia. “Some people get involved right away, the others might get involved a quarter after that.”
He adds, “As far as performance for the rest of the year.. I think the retail investor base is reasonably bullish now, but they’re not irrationally exuberant. While core inflation looks pretty good – inflation is up 5% year to date. For our clients… those things are in the back of their mind.”
Private equity owns some of your stock and has put pressure on you to sell the company – any change in your relationships?
“No,” replies Moglia. “I’ve said before that I recognize that hedge funds need to be able to… take care of their clients, but our responsibility is to deliver long term value for our shareholders. They do what they need to – and we do what we need to.”
What do you need to?
“The number one priority is for us is to execute our business plan and our client segmentation strategy and move from a firm that is dependent on transactions to that of an asset gatherer,” replies Moglia. “And if we see an M&A opportunity that would legitimately make sense, we will seriously look at it.”
You said trading up-ticked over the last couple of weeks?
“For the quarter we actually came in at 245,000 trades and what we’ve seen for for July is we’re up to 255,000. And I think the reason for the up-tick is because of power in the international markets.”
What’s your edge relative to someone like Fidelity as an asset gatherer?
“One thing we will focus on is the typical family in the United States. Most full commission firms… are high net worth businesses. Ours is going to be more mass affluent. Second, we have always had a competitive edge with our technology and… (we’re working on) how to scale online advice.
Dylan asks the guys what they think?
Eric Bolling and Tim Seymour are cautious.
Pete Najarian likes the company but wishes AMTD did more work with options.
Jeff Macke likes this stock.
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