Jacob Doft co-founded Highline Capital in 1995 and is responsible for overseeing the investment activities. Prior to forming Highline, Mr. Doft was employed at Gleacher & Co., a New York investment bank, where Jacob Doft gained experience in mergers and acquisitions, corporate restructuring and private equity investments. Jacob Doft spoke today at the Capitalize For Kids Conference in Toronto and presented his favorite idea. Below are some (very) informal notes from Doft who talks Intercontinental Exchange Inc (NYSE:ICE).
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Jacob Doft
Highline Capital
2.5b in AUM
Started the firm when he was 25 years old
Equity long/short
Focus on companies undergoing change
30 team members
Founded in 1995
Structural Change/Strategic Change/Financial Change
Jacob Doft on Intercontinental Exchange Inc (NYSE:ICE)
40% of revs come from non transaction recurring revenue
16% of revs comes from Interest rates
Solid Ceo, Jeff Sprecher
Investment case
All exchanges are leveraged to volumes
LIBOR opportunity
OTC clearing opportunity
Cost cuts
Capital allocation
Selective pricing
If volume comes back (which they think it will) it will create huge upside
Potential revenue for LIBOR =$240M
Based on the number of linked securities and annual fee of 16,000 (went into effect july 1)
Generates a lot of cash, with low CAPEX
Can buy back a significant amount of shares
Think they can spend 3.5b on debt paydown and share buybacks over next several years
Consensus 2016 estimates at 13.11 apply a 10% discount in volume, but they think volumes will rise and upside is possible
Macro Catalyst: Fed Raises rates (note-taker comment: the fed will hold rates lower than most think!)
He thinks Brent Crude volume will be strong and is more useful than WTI
10% of ICE transaction volume comes from Natural Gas
LNG exports from North America
Volume and volatility are highly correlated
Upside case
EPS cases
flat volume — 13.89
up 30% –16.26
up 50% — 17.85
Valuation 2016 P/E
ICE consensus 15.2x
Recovery assumption case 11.2x
