GEO Investing

Background: GAIN Capital Holdings, Inc. (NYSE: GCAP) provides innovative trading technology and execution services to retail and institutional investors worldwide, with multiple access points to OTC markets and global exchanges across a wide range of asset classes, including foreign exchange, commodities, and global equities.  GAIN Capital is headquartered in Bedminster, New Jersey, with a global presence across North America, Europe and the Asia Pacific regions.  

Why GeoInvesting chose to delve into this story: Our biggest reason for researching this company was the “information arbitrage”  we thought that the market had yet to fully digest, giving those that were “in-the-know” the opportunity to jump in on the investment before the masses.  We viewed an impending transformative acquisition as an opportunity for the company to increase its institutional and global customer footprint.  Aside from GCAP’s dividend yield and stock buyback program, another major factor that caught our attention was managements focus on adding fresh sources of revenue and jump-start growth by doing the following:

  • Increasing revenues from the commission based business.
  • Increasing overall customer accounts organically and through acquisitions.
  • Putting greater emphasis on growing its institutional business.
  • Gaining retail exposure into global markets where the company’s exposure has been limited.
  • Increasing its product offerings.

Action Steps: Go long GCAP at a price of $5.50 on June 12, 2013.

Results: A $10,000 investment in GAIN Capital Holdings, Inc. (GCAP) shares resulted in peak profit of $16,000, or a gain of 160%