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Virtu's Circle: High-Frequency Traders Profit When the Market Freaks

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NEW YORK (TheStreet) -- Virtu Financial (VIRT) made a name for itself with the claim that it had only one day of loses in five years of trading, but the company's most recent quarter may be something special even by that rarefied standard.

High-frequency trading firms are at their best during wild market gyrations like those in August, when a continuing slowdown in China spooked traders worldwide, and Virtu is likely to demonstrate that when it reports earnings next month, said Richard Repetto, an analyst with Sandler O'Neill. The firm has a "buy" rating on Virtu stock and a price target of $26.

The first high-frequency trader to go public, Virtu may report earnings of 31 cents a share, the average of estimates in a Bloomberg survey. That would help make up for a dismal second-quarter performance, when profit of 1 cent a share lagged far behind estimates of 32 cents. It would also reward investors who Repetto said helped drive Virtu's shares up 12% since the markets plummeted in mid-August, outpacing a gain of 4% by the S&P 500.

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