Stefan Ćulibrk of Highway One Asset Management presented his in-depth investment thesis on Interactive Brokers (US: IBKR) at Wide-Moat Investing Summit 2020.

Thesis summary:

Interactive Brokers is a low-cost, high margin, electronic brokerage business. IBKR’s clients are individuals, financial advisors, introducing brokers, hedge funds, and proprietary trading firms. IBKR offers attractive rates on margin loans, deposits, and low commissions to its global client base. Most of the company’s revenue comes from interest income collected on client assets. Thomas Peterffy owns 73% of the company he founded in the late 1970s. The company is conservatively financed, carrying billions more than the regulator is asking for, and multiples more than peers.

Stefan expects IBKR to double the number of accounts, client equity, and earnings power over the next five years. A normalization of interest rates should turn earnings power into cash flow.

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About the instructor:

Stefan Ćulibrk co-founded Highway One Asset Management in 2019, with a goal of achieving a superior long-term rate of return on capital. Previously, Stefan served as managing partner of Ćulibrk Partnership. Before that, he was employed by Bank of America Merrill Lynch, London, an investment bank, where he was trading emerging market equities from 2013 to 2014. Prior to joining the equities division, Stefan interned in the foreign exchange trading department in 2012. Stefan received a Master in Finance degree from the IE Business School, Madrid, in 2012. He has been a CAIA charterholder since 2010.

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