NDAQ: Deals will drive NDAQ

Play on consolidation of the bourses and scalability of its platform. A couple of deals may be coming up. Hit by no-go of LSE deal (maintains large position and participates on upside). The OMX deal can be a huge positive for NDAQ. OMX has a lot of technology that brings to the table, including equity options clearing, a capability taht NDAQ currently does not have. Both exchanges have posted growth on the high end of their group, but NDAQ's forward earnings multiple is below average. OMX has been gaining Scandinavian share away from ADRs because of its superior platform. The upside is not priced in and NDAQ is down from a high in the $45 range. NDAQ has been a growth and leverage story that became fully valued in the mid-40s and now is at good buying range: growth-trading volumes grow as products and brokerage becomes more globalized, leverage-the technology infrastructure can add more capacity with revenues flowing almost directly to the bottom line. Given the strong driving forces of globalization of competition and opportunities to leverage the infrastructure, there is no reason for NDAQ not to be a participant in the consolidation game, which is perhaps the only risk for the value not to be realized. There is also certain cyclicality in exchanges equities for those that are interested in better positioning by perhaps waiting until August and planning on exiting during the Nov-Dec or the early summer period. A downside protection could include a pair trade against one of the more expensive exchange stocks, e.g., NYX which may face integration issues, or CBOT which may also face issues with the CME merger and looks very expensive (though it looked expensive in the past and it's kept rising).