In every industry there are different ways to achieve the same goals. Some people will try to pick a stock that will tend to go up. Sometimes the easier method is to buy the owner of the exchange because if the exchange is making money, then it is rewarding a company.

The owner of the NYSE is Intercontinental Exchange Inc (ICE) and if you think about the stock market, millions of shares are traded daily for thousands or millions of reasons, but given the exchange of stock there is a fee involved somewhere. The exchange will capture that fee and given a minimum volume the exchange will make money. As long as the minimum is reached, the rest is gravy and every year with lower computing costs the cost is less. The owner of the exchange (ICE) deals in large data sets and that can be translated to other companies. ICE examined the market and decided the largest mortgage software company or Black Knight was a good fit and purchased it. ICE bought Black Knight for $11.7 billion. ICE had bought mortgage automation company Ellie Mae from private equity firm Thoma Bravo for $11 billion in 2020.

With all large purchases, the regulators often have a view and they have been giving their input in an effort that too many monopolies exist. The regulator in this case is the US Federal Trade Court or FTC encouraged ICE to sell off parts of Black Knight including Optimal Blue and Empower – a software which helps banks generate loan documents to Constellation Software Inc.

Linking to dividend paying stocks, ideally you want to buy a company that whatever the economic cycle the company makes money. Often times you will focus on a particular stock or industry sub group, but buying the owner of the exchange will accomplish the same goals. The processing of information for a fee ensures as long as their is economic activity fees will be generated. If fees are generated, profits can be generated and risk level remains low.

There are more questions than answers, till the next time – to raising questions.