IBKR is Born (Interactive Brokers IPO)

I normally like to annotate charts but this 10 month ICE daily above is a piece of art. After some consolidation and a healthy pullback this stock looks poised to blast higher. As the long time readers know I have a fascination with ICE and it has been interesting to watch it grow into being an extremely well behaved trading stock. But tonight I wanted to bring it up as an example of what a great IPO can do in the early years.

After a bullish yet erratic initial six months following the IPO (which happened to be on the day before my birthday, Nov 2005) the chart began to take shape. On the weekly below you can see how the stock has been able to develop a more clearly defined trend and pick up momentum. Also note how the volume has increased while the weekly candles have become smaller(less volatility). Just click on the chart below:

From a fundamental standpoint the Intercontinental Exchange and Interactive Brokers don't have all that much in common They are both in the business of options, a rapidly growing investment vehicle, however ICE is a commodity contract exchange while IBKR is an online equities broker. Their IPOs were somewhat different too, ICE offered up only 16 M shares and jumped substantially from the open on its first day of trading, although it closed far from the high of the day. IBKR on the other hand:

"The automated global options market maker and broker, rose 4% to 31.30 after hitting 34.25 intraday. Interactive Brokers raised $1.18 bil in its IPO, the biggest so far in '07. The offering was first planned for 20 mil shares at $23-$27 each. But Interactive Brokers (NasdaqGS:IBKR - News) ended up selling 40 mil shares at $30.01 each, at the high end of its revised range." -ibd

I use Interactive Brokers and aside from a few minor complaints I am pleased with them. They have a great trading interface which is software based and enables programmed trading without too much effort. As a broker they are great because they have very low commissions and I can chat with technical support with little delay about any sort of problem. What really makes me really bullish on the stock (after it finds support) is the fact that they only do 20% of the US options volume. With their platform so much more advanced for automated options trading I could see this market share increase dramatically and further the US options market is growing anyways. They have a great mission statement:

"Create technology to provide liquidity on better terms. Compete on price, speed, size, diversity of global products and advanced trading tools."
You can read more about Interactive Brokers here, its really a great story.

At any rate, they sold a ton of shares in a auction offering. So for now I would guess it needs to find some sort of equilibrium before beginning a good run, but you never know with IPOs. You can bet I will be watching this one, hoping to get some cheap shares soon and eagerly awaiting options on IBKR. The first day of a beautiful thing?:
By the way, all this new supply of online brokerage shares makes me want to short the other, lower quality brokers, ie. Ameritrade (AMTD). I guess that stock is trying to run on pin action or something, but I'm itching to buy some puts. I'll tell you about my experience with Ameritrade on another day, but most people know what I'm talking about.