Goldman Sachs Comments On Financial Holding Companies (SCHW, KCG, AMTD)

Charles Schwab SCHW Schwab released January metrics this morning. While total trades of 512K were 7% better than Goldman's estimate, SCHW noted seasonal One-Source trades were a major driver of increased activity, thus it expects the percent of trades that are revenue based likely fell to 65-66% from 69% in 4Q. In addition, net new assets of $8.5 bn were below Goldman's $12 bn estimate which implies organic growth of 5%. Knight Capital Group reported January average daily dollar volume traded of $29.45 bn, generally in line with our $29.54 bn estimate, and up 5% YoY compared with a 9% decline in US Equity ADV to 6.9 bn and a 16% YoY decline in the VIX to 17.2% in January. HotSpot and KnightDirect remain solid growth drivers, but near term results will be driven by equity results as other products remain relatively smaller. Last week, TD Ameritrade released January metrics that were better than Goldman's estimates. In addition, AMTD noted client assets went above $400 bn as of February 10, quicker than we anticipated. January DARTs of 452K were better than the mid-month 439K trend, and average IDA/Interest Earning/Fee-based assets were all higher than estimated. Accordingly, Goldman raises its F2011 estimate to $1.14 from $1.10. SCHW closed Monday at $19.16 AMTD closed Monday at $21.06 KCG closed Monday at $14.50