Penson Worldwide (PNSN) -- Valuation

RocketManJames · #1 01-04-2007, 07:29 PM

Anyone want to take a crack at coming up with a rough valuation of Penson Worldwide (PNSN)?

It sits at $26.50 today, and a friend had recommended it shortly after its IPO at $18. Anyway, just wanted to get opinions... is it under-, fairly, or richly valued?

I wasn't able to come up with any clean comps to peers... a couple companies that overlap are Schwab (SCHW) and eSpeed (ESPD).

I have not purchased any shares, and do not currently plan on doing so any time soon. I have more of an educational interest.

Thanks.

-RMJ

ayamaguc · #2 01-05-2007, 04:06 PM

I should know a lot more about Penson, but I don't. Off the top of my head they are the #5 or #6 cirrespondent clearing firm (securities and other exchange products like futures) and got there by being one the fastest growing (again, don't know currently).

They are similar to Schwab (retail brokerage) and ESpeed (electronic marketplaces for bonds?) in that they are in the financials/securities/trading business, but I think that's about it. The problem you'll have getting clean comps is that all of their big competitiors have been swallowed up by large investment and merchant banks. Penson is one of the only independents among the bigs.

Not sure who you can comp them too. Maybe Southwest Securities?

RocketManJames · #3 01-05-2007, 07:27 PM

Thanks for your input...

I figured Schwab does their own clearing and also does produce some of their own in-house technology. And, I figured eSpeed would be similar to Penson's technology division, Nexa Technologies, which does a lot of the trading software, etc. Some of the software is licensed to other brokerages, but a good deal of it as I understand it is consumed by their parent, Penson.

If it's too difficult to comp... can you provide your insight as to the best way to value the business? Sounds like you have an understanding of the true growth trends of the industry... care to share?

-RMJ