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2019-10-14 21:47:06

There are so many listed stocks and so few hours in the trading day. New traders are taught to study at least for one hour for each hour of trading; that means if the market is open from 9:30 - 4:00 traders should be researching 6.5 hours each night. There aren't enough hours in the day. In this article we're going to bring to light a previously unknown company, Freedom Holding Corp. (OTCQX:FRHC). The company has a market cap greater than $800 Million and last quarter had $25M in revenue, and $8.21 Net Income (Profit).

The company is being listed on the NASDAQ exchange Wednesday, according to this press release:

Trading on the exchange is expected to commence at the opening of trading on October 15, 2019 under the symbol FRHC. Since July 2018, the Company's common stock has been listed on the OTCQX Best Market, which is operated by the OTC (Over-the-Counter) Markets Group. The Company was named to the OTCQX Best 50 list in January 2019. We are pleased to announce our Nasdaq exchange listing. I believe we are the first Kazakhstan-headquartered financial services firm to be listed on the exchange. This is an important accomplishment for our company as we continue executing our business plan. We expect this listing will facilitate our efforts to communicate our vision to a broader audience and further develop strategic synergies we see between investors and investment opportunities in our region and those in the U.S. and other international financial markets, stated the Company's Chairman and Chief Executive Officer, Timur Turlov.

We believe that this company is a hidden gem, and the NASDAQ listing is going to give FRHC the exposure it deserves. This will drive the stock higher, although it's already trading as of this writing at a P/E ratio of 36 which is high for the sector; (BAC) and (JPM) both have P/E below 12). However, as we have noted in a recent article about FinTech and the financial sector as a whole, we believe in the years to come there will emerge innovators and entrepreneurs; who will take market cap away from dinosaurs that refuse to evolve. This has happened in other sectors, and is now happening across the financial sector (including retail, wholesale, brokerage, finance, lending, banking, derivatives, and crypto).

Summary of the business operations from Yahoo Finance:

Freedom Holding Corp., through its subsidiaries, provides retail securities brokerage, research, investment counseling, securities trading, market making, corporate investment banking, and underwriting services. The company offers investment brokerage services for exchange-traded and over-the-counter corporate equity and debt securities, money market instruments, exchange traded options and futures contracts, government bonds, and mutual funds; Margin Lending services collateralized by securities and cash in the customer's account; various investment education and training courses; and investment research services. It also provides capital raising solutions for corporate clients through initial public offerings and follow-on offerings; debt capital markets solutions that focuses on structuring and distributing private and public debt for various purposes, including buyouts, acquisitions, growth capital financings, and recapitalizations. In addition, the company is involved in the proprietary trading and investment activities; and trading and brokerage activities. Further, it act as an intermediary between borrowers and lenders of short-term funds and provide funding for various inventory positions; and employs repurchase and reverse repurchase agreements in proprietary trading activities. It has operations primarily in Russia, Kazakhstan, Ukraine, Uzbekistan, Kyrgyzstan, and Cyprus. The company was formerly known as BMB Munai, Inc. and changed its name to Freedom Holding Corp. Freedom Holding Corp. was incorporated in 1981 and is headquartered in Almaty, Kazakhstan.

Full disclosure, this is a new company. Take a look at the 1 Year vs. the 5 Year charts.

Short term 1 Year chart:

Data by YCharts

5 Year chart:

Data by YCharts

Also, we have to note that companies may run up in high expectations of NASDAQ listings so there may be a pullback. Our bias is bullish for the company so we will look to buy on any pullbacks. We believe that FRHC is a new breed of financial companies that is going to define the next generation of FinTech and the entire financial sector. In our last article we highlighted 2 positives in the banking sector, Money Lion and Chime. We feel the same way about FRHC, however FRHC is not FinTech. It is however innovative and unique in their approach to brokerage, and they have the track record to prove it.

The question is what FRHC will do in the US. They are big in East European and Central Asian countries but are registered here in the US. They do not have a branch office in US nor any clients. But in Central Asia, especially in Kazakhstan, they are the only game in town. Not only that, but they are the only source for Pre IPO and IPO allocations which has made them a darling as the past 5 years have seen many successful IPOs.

NASDAQ will give FRHC the exposure they need to make partnerships and swim in the big US waters. Being a non-US specialist, this will help them enter markets like Canada and Latin America. In other words, we believe that the reason the stock will go up is not based on their financials only but the financials look good. It's based on the innovation that's still to come, that's still unannounced. We don't know what their next move will be. All we know is based on their past success, it's going to be huge. And being listed on the NASDAQ puts them in the same category as companies like (FITB) (ZION) and many others (more than 300, you can see the full list here). And those are just banks. The point is, FRHC is in good company now, and they deserve to be. Their returns and historical performance is unmatched in the world of finance startups. Great job guys, you knocked it out of the park, as we say in America.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in FRHC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.


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