CMC Markets plc (LON:CMCX) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of The Diverse Income Trust plc (LON:DIVI) on what’s driven the Trust’s strong performance and the outlook for a number of its portfolio holdings.
DirectorsTalk asked: CMC Markets recently announced a major strategic partnership extension with Westpac. It’s also been diversifying its business beyond traditional spread betting and CFDs. What milestones will you be watching most closely over the next 12 months?
Gervais noted: There are quite a few of these types of companies where people want to trade different assets, not just indices but individual stocks and such like. Companies like this have got a very good market position, they deal with a lot of professional investors, not just private investors.
Most particularly what’s amazed and thrilled me about this company is they’ve got an unusually strong base software stack. I think it’s a very resilient stack, I think this is an area which really differentiates them from many others in that they’re very integrated and they’re very good at managing risk. More importantly, they can bring on major customers, and Westpac is just another example of that, when I think a lot of others can’t.
So, I think they’ve got the opportunity to scale up very considerably. This is another very significant customer win. I’m pretty excited about the ability of this company to generate more cash on some of these customer wins. I think they’ve got the opportunity to do this three or five times more over the next few years and as they do so, I think that’s really going to drive the cash. So, it really is more of a technology stock, in a way, operating in the financial sector.
