TIP811: OTC MARKETS (OTCM): A PICKS AND SHOVELS PLAY IN MODERN CAPITAL MARKETS

W/ KYLE GRIEVE & SHAWN O’MALLEY

TIP811: OTC MARKETS (OTCM): A PICKS AND SHOVELS PLAY IN MODERN CAPITAL MARKETS W/ KYLE GRIEVE & SHAWN O’MALLEY

29 April 2026

In today’s episode, Kyle Grieve and Shawn O’Malley analyze OTC Markets Group, a hidden infrastructure company that collects tolls on over 12,000 securities while operating with fewer than 130 employees. They explore why OTCM is the only viable option for small companies and international firms seeking access to the US market, and how this quasi-monopoly has generated exceptional returns without debt or excessive dilution. By the end, you’ll understand the durable competitive moats protecting this business and whether the current stock price offers an attractive entry point for value investors.

SUBSCRIBE

IN THIS EPISODE, YOU’LL LEARN:

  • Why OTC Markets operates as a hidden monopoly, most investors have never heard of
  • The three business segments generating recurring revenue from market infrastructure
  • How OTCM’s pricing power compares to other monopolistic businesses like Verisign
  • Why 130 employees can manage the infrastructure for over 12,000 securities
  • The exceptional unit economics that make Corporate Services so profitable
  • What keeps customers so loyal that they rarely consider switching platforms
  • How regulatory relationships create barriers to entry, competitors cannot replicate
  • Why management’s capital allocation approach is so different from that of typical CEOs
  • The surprising reason declining subscriber counts might not be concerning
  • Whether this hidden infrastructure gem deserves a spot in your portfolio
  • And so much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Kyle Grieve: Every time you buy a stock that doesn’t trade on the New York Stock Exchange or NASDAQ, a foreign company, a small cap, a Pink Sheet name, there’s a company in the background collecting a toll. You’ve probably never thought about them and they’ve never thought about making you think about them.

[00:00:13] Shawn O’Malley: That company is OTC Markets, and here’s a wild fact. The platform they run covers over 12,000 securities, more than both major exchanges combined. Yet the whole operation runs on fewer than 130 people.

[00:00:26] Kyle Grieve: Today we find out how a business that most investors have never even heard of has quietly compounded free cash flow at 14% annually over a decade, and whether it can continue doing it.

[00:00:38] Intro: Since 2014, with more than 200 million downloads. We have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:01:24] Shawn O’Malley: Hey folks, today we will continue our hunt for intrinsic value by going deep into the infrastructure and operations that underpin financial markets with a company called OTC Markets Group. And if you’ve ever invested in the US in companies not listed on the New York Stock Exchange or NASDAQ’s, a pretty good chance, whether you realize it or not, that you’ve come across OTC markets before where OTC stands for Over The Counter. And in market cap terms, it is a small company, and I think it’s fair to say it is a hugely important role in the financial system, and that has enabled the company to generate some really eye-popping financial results.

[00:02:01] Kyle Grieve: That’s right. So I remember listening to one of Mohnish Pabrai’s chats a number of years ago where he said that one of his favorite ways of finding a new investment idea was to simply just find a wide moat business in one country that was being applied to yet another country.

[00:02:12] Kyle Grieve: Now, OTC Markets doesn’t quite fit this bill as it’s operational in the us but it’s among a very small number of capital market infrastructure plays that are available. And it has very, very unique competitive advantages. Now, OTCM also has a very rich history, so its current CEO Cromwell Coulson bought Pink Sheets with an investor group way back in 1997 to bring the business into the digital age.

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