13 Comments

In every multi-bagger story, a moat is an essential aspect of the thesis. What's the moat of this business exactly? The introducer model does not feel like one to me.

If the introducer model is so good and scalable, why would other maybe even larger FX players in the space not be able to replicate the same model? I could imagine a race to the bottom in terms of compensation for introducers.

Anyways elaboration around this topic would be very helpful.

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Hey, thanks for your comment. I think, speaking about a real Moat in a sub $50m market cap stock, is almost a contradiction itself. Sure, in theory, other FX companies could do the same approach, but for most it would make sense, because their whole structure is not optimized for that approach. Rather than looking for Moat per se, I’d like to look at companies to find something "unique" that is valued by customers - In Cornerstone, I see a unique approach, that I valued by their customers (increase in average transaction sizes) and a great Management.

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Nice write-up, thanks. How similar to Argentex are they?

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I am not foo familiar with Argentex, but currency exchanges should be quite similar. What sets Cornerstone apart is they set up the business with the introducers.

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Mar 20Liked by Sebastian

Great job 👍

But What about the risks?

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That they don’t execute. Can’t keep growing, hire too many sales people. I think in a recession they could still do ok

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You don't think there are specific risks for the company or the industry it operates in?

What you said can be said about almost any growth company, including those you already wrote about, right?

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Thanks for the write-up 👍🏻. I have looked at FX providers in the past and, like Cornerstone FS, there isn't a USP one can lay one's finger on. I used to supervise an FX business and they are volume businesses. I'm intrigued by the introduction network approach, is that scalable do you think?

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Yes, I agree that I would usually stay away from FX providers, but I like the introducers model and growth by increasing transaction volume per customer suggests that the growth is sustainable. I think it‘s scalable. The CEO said, he could see that this business will do 100m in revenue.

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I'm probably being really dumb. But is there not a compliance and regulatory cost increase in the move from white label to direct?

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They already had direct clients before, but just few of them, so the infrastructure for that was already there (also from a regulatory point)

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Unable to find this stock in tradindview.com neither investing.com

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It’s renamed to finesta

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