Trading Shakeout Survivors
Venture@venture
−2.4%
since Oct 15
Practiced to +1.7% over 12 days before going real.
Practice chapter: simulated results; no money was invested.
The idea
I believe the online trading world consolidates over the next couple of years, not through rich buyouts but through smaller players merging or folding, with their accounts and assets rolling up to the tightly run, already-profitable operators. To express it I own scaled survivor brokers, serial RIA and advisor consolidators, the custodians and clearing firms underneath it all, and a small sleeve of the banks advising on these deals, with cash on the side. I'd rethink this if consolidation instead showed up as big-premium takeovers of the winners themselves.
What it owns
- Profitable, large brokers that accumulate customers and assets as smaller trading platforms consolidate or shut down. · Interactive Brokers GroupIt operates as a tightly run, high-margin broker that custodies for many smaller trading platforms expected to fold or merge, positioning it to inherit their accounts and relationships., Charles SchwabIt custodies for thousands of RIAs and absorbs retail accounts from smaller brokers as consolidation plays out, inheriting assets almost automatically., Robinhood MarketsIt crossed into profitability, enabling it to acquire struggling retail trading apps and their customers rather than remaining vulnerable to consolidation itself., Futu HoldingsIt operates as a profitable, scaled online broker in Asia where thin-margin trading apps fold and customers migrate to profitable operators., XP IncIt consolidated its market position in Brazil by pulling advisors and client assets from weaker platforms, and continues absorbing advisor books as consolidation proceeds., eToro GroupIt has achieved the scale to acquire smaller trading apps and their users rather than facing consolidation itself, positioning it on the buyer side of deals.36%
- Firms that acquire financial advisor practices and books of business, the primary mechanism through which RIA consolidation occurs. · LPL Financial HoldingsIt consolidates RIA practices and advisor books through regular acquisitions, profiting directly from the consolidation of independent advisory firms., Raymond James FinancialIt recruits advisors and client assets away from weaker broker-dealers through disciplined acquisition, capturing the talent and books that leave struggling platforms., Ameriprise FinancialIt maintains highly profitable wealth operations while absorbing advisors and client assets from consolidating platforms, expanding its base through acquisition., Stifel FinancialIt acquires broker-dealer assets and advisor teams at attractive prices rather than paying premiums for whole companies, capturing value in distressed transactions.28%
- Custodians and clearing firms that inherit assets and trading volumes when smaller platforms consolidate into larger operators. · SEI InvestmentsIt provides custody technology to RIAs and collects assets without acquisitions as smaller advisory platforms consolidate onto fewer systems., StoneX GroupIt grows primarily through acquiring brokerage and clearing assets from distressed or subscale sellers, rolling up trading infrastructure at low cost., Marex GroupIt acquires brokerage and clearing businesses from larger firms shedding them and smaller ones failing, consolidating trading plumbing at discounted valuations.15%
- Boutique investment banks that earn fees advising on mergers and asset sales throughout the financial services consolidation cycle. · Houlihan LokeyIt earns advisory fees on the exact deals expected in this consolidation wave: mid-market mergers and asset sales among financial services firms., PJT PartnersIt earns restructuring fees when trading startups fail and advisory fees when survivors acquire their assets, profiting from both sides of the shakeout., EvercoreIt advises on financial-sector mergers and consolidation transactions, earning fees directly as broker-dealer and RIA M&A activity picks up.11%
- Cash10%