BGC Group, Inc. (BGC): A Bull Case Theory

We came across a bullish thesis on BGC Group, Inc. on The Lion's Roar - Outside the Box Investments’ Substack by Dominick D'Angelo. In this article, we will summarize the bull’s thesis on BGC. BGC Group, Inc.'s share was trading at $9.55 as of June 24^th.

BGC Group is benefiting from heightened market volatility, with Fenics Brokerage revenue rising 18% year-over-year, led by a 35% surge in the Rates segment. Moody’s May 2025 downgrade of the U.S. credit rating from Aaa to Aa1 has provided a fresh catalyst, likely boosting rate trading volumes.

Historical data from Trump’s first term suggests that trading-related firms tend to outperform during periods of political and macro uncertainty—a trend that appears to be continuing in his second term. With Lutnick’s proximity to Washington developments and today’s higher rate environment, BGC is even better positioned than it was eight years ago.

Meanwhile, the recently closed acquisition of OTC Global is showing stronger-than-expected topline contributions. Initial expectations of $400M in annual revenue have been revised upward to $460M based on Q2 guidance, implying ~15% upside. However, its margin profile is dilutive, with pre-tax margins in the low teens versus BGC’s 20%+ historical levels. Management plans to streamline operations and back office functions, with margin expansion anticipated over the next several years. OTC Global also brings new cross-selling opportunities and enhances BGC’s presence in the energy space, which is projected to account for ~40% of 2026 revenue.

Importantly, if voice-based energy revenues can shift to higher-margin electronic formats, it could significantly boost earnings. FMX Futures, while delayed, has launched 2-year and 5-year Treasury contracts, with volumes expected to build gradually. The recent share buyback from Howard Lutnick at $9.20, along with private placements to Josh Harris and Glenn August, removes a key overhang and further strengthens investor confidence.

Previously, we covered a bullish thesis on XP Inc. by Kristopher Rymer in January 2025, which highlighted XP’s dominant financial platform in Brazil, strong margins, and attractive valuation. The company’s stock price has appreciated by approximately 70% since our coverage. This is because the thesis played out as expected. Dominick D’Angelo shares a similar view but emphasizes macro-driven catalysts in BGC Group’s case.

BGC Group, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held BGC at the end of the first quarter, which was 33 in the previous quarter. While we acknowledge the risk and potential of BGC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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