MKTX Bear Case

I posted this on another board, but thought I’d see if anyone here is interested. I believe Vish follows MKTX closely.

I’ve been following MKTX for some time now, but haven’t made an initial investment. I’d like anyone who follows MKTX to read the following article and comment if you are inclined.…

The author likes the competitive advantage here, but lists a lot of potential competitors looking to take market share. Their problem with MKTX is valuation.

By assigning a 15 multiple to the future stock price based on increased competition lowering margins, the author believes the issue is trading at a 22% premium today.

So the author’s bear case rests on multiple compression over time.

One last thing that I had not thought of here. The potential for the SEC, for instance, to create a central authority for bond price discovery would, at first glance, seem to kill MKTX. The article seems to think this is unlikely to happen anytime soon. However, the thought is scary for holders of MKTX.

Interested in others thoughts here.


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