HFT giant Virtu Financial does just that. Their track record suggests that they have somehow cracked the code and are in possession of a little something we in the industry like to call: The Holy Grail.
These guys just reported their first earnings as a publicly traded company and boy do they ever rake in the dough!
VIRT makes markets in more than 11,000 financial instruments on more than 225 exchanges in 34 countries around the world. It averages ~5.3 mln trades per day globally. While just 49% of its overall positions are profitable, the company has had only one overall losing trading day during a period of 1,485 trading days (Since Jan 1, 2008). Additionally, its risk management system is designed to "lockdown," or freeze, upon detection of any trading strategy generating revenues in excess of its preset market making limits; this includes the predictive momentum and signal trading strategies many other trading firms engage in.
VIRT generates revenue primarily by performing market making activities, or buying and selling securities and earning small amounts of money on the bid/ask spread of a large volume of trades. All of its transactions are considered "market neutral," meaning they are independent of market direction and are not speculative.
Wrapping up, the company saw tremendous growth during the quarter on both the top and bottom line. Revenue growth was impressive, as previously mentioned, and Adjusted EBITDA Margin increased to 70.5% from 65.4% in 1Q14. However, because it's such a young IPO, analyst's have yet to initiate coverage on it. That said, VIRT's quiet period expires on May 12, so this may be one to keep an eye on is the coming week as analyst's and investors digest today's earnings announcement.
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