“We love volatility,” says Peter Cruddas, chief executive and founder of CMC Markets (LON:CMCX).
It’s a refrain you will hear from all the major spread betting and CFD firms. Roller-coaster financial markets act as a catalyst for trading volumes.
They also create the perfect storm for the likes of CMC Markets that allow investors to trade on financial instruments such as the Footsie or the price of a barrel of crude.
So, volatility in this context is good for CMC Markets. It’s not if you are trying to list a business on the stock market.
Yet that’s exactly what Cruddas and his advisors did earlier this month - almost a decade after plans were first unveiled to bring CMC Markets to market.
The price achieved was at the lower end of expectations. But according to the former Tory party treasurer the IPO certainly wasn’t a failure.
“There was a little calm before the storm when we got it away [the listing]; the storm has come back,” said Cruddas.
“There was a good response from the investors.”
You’d have to say given the conditions, it wasn’t a bad effort at all; one that leaves plenty on the table for those dealing in the secondary market, as well the institutions that took the stock.
Cruddas, who owned 90% of the firm before listing, sold 25% of his holding, so remains CMC’s biggest investor by some distance.
He is locked in not to sell down further for at least another two years.
This and a pledge to remain in charge at CMC Markets for another five years, mean he is in for the long-haul.
So, this isn’t the sort of flip you see when an established firm comes to the market with its growth years firmly in the rear-view mirror.
But why not keep the company private and pay a fat dividend for the next five or six years?
“We have grown so rapidly over the past three years,” the CMC Markets boss explains.
“We are starting to talk to some very interesting partners.
“So, the listing is a status thing. We need the status of a public company. We have earned that right.
“We have put ourselves in a good position and it is part of the long term planning.
“If people deal with us and have seen we have been through the due diligence of a stock market listing it gives us the credibility and our partners comfort.”
Based on the plans Cruddas and his CMC Markets team have mapped out, there is plenty of room for expansion.
It has invested heavily in best in class technology that means 50% of its business will be done over the smartphone, “with masses of scalability”.
It recently launched a new product called Countdowns and is planning to launch a number of binary products very shortlyThe businesshas also developed a new dedicated stockbroking platform for its Australian business with institutional tools that enablesits Australian clients the opportunity to buy and sell shares at competitive prices .
CMC Markets has a number of prospective partnerships where it will provide trading technology on what’s known as a white, or grey label basis.
The business is expanding geographically having opened new offices in Poland and Austria. It is hoped a new management team will give its French operation a boost.
Investing heavily in digital marketing will help propagate the message on price and product.
So, this is a business in growth mode, not one that will take its pedal from the metal now that it is listed, Cruddas says.
Analysts reckon the firm is trading on forward earnings multiple of 12-13 times, which puts it at a discount to its closest competitor..
Add to that a prospective dividend yield of 4% supported by some prodigious cash generation and you see CMC Markets has left a little on the table for those acquiring the stock in the after-market.
So, the fall of shares below just below the 240p a share listing price offers investors not currently shareholders an opportunity, Cruddas argues with some conviction.