In short: Directly rebuts the client question about the "stunning" decline: MIAX "has actually done better than the other securities exchanges, and it's no lower now than it was a few months ago," and is substantially higher than 12 months ago and ahead of the S&P. Hasn't yet reached full scale economies, yet reported 40% higher revenue in the March 2026 quarter with free cash flow more than 2x higher. Disclosed as a significant holding across advisory accounts, with the firm potentially deemed an affiliate; listed only in 2025 (formed 2000).
MIAX is the newest of the U.S. exchange operators — founded in 2000, only listed in 2025 — and is the name clients were most alarmed about, having heard of a "stunning" price decline supposedly caused by prediction markets like Kalshi.
Horizon Kinetics simply checks the facts. MIAX has actually held up better than the other exchanges, is no lower than a few months ago, and is meaningfully higher than a year ago and ahead of the S&P 500. The business is growing far faster than its bigger peers because it hasn't yet reached the scale where the fixed costs stop mattering: revenue was up 40% in the March 2026 quarter and free cash flow more than doubled. That is the whole point of the exchange model — as volume grows, an ever-larger share of each incremental dollar becomes profit. It is one of the firm's two disclosed significant holdings (with TPL), large enough that Horizon Kinetics may be deemed an affiliate.
Full passage: premium transcript (PDF).
In short: First (new) pro pick — small-cap exchange (Stahl was foundational; IPO'd last year). ~18% share of US multi-listed options in a market that 4×'d (16M→63M/day, '19–'26); you get the exchange at fair value plus a "very large call option" in its Bloomberg B500/B100 rules-based index futures. Possible takeover candidate.
MIAX runs stock-options exchanges — the marketplaces where options (contracts that let people bet on or hedge a stock's price) get bought and sold. Like any exchange, it earns a tiny fee on every contract that trades, and it costs almost nothing to handle more volume, so profits scale fast as trading grows.
Two things make Davolos like it. First, the core business is cheap and growing: MIAX already handles ~18% of all US multi-listed options, and that whole market has quadrupled since 2019 (from 16M to 63M contracts a day) — you're buying a fast-growing toll booth at a fair price. Second, the "free upside": MIAX is launching futures on Bloomberg's new B500/B100 stock indexes — a rules-based rival to the S&P 500 that can add hot IPOs (think SpaceX, OpenAI) faster than the S&P's committee. If that takes off it could be worth far more than the whole company today, and you're paying almost nothing for that shot (what he calls a "very large call option"). It's also small (~$3B) enough to be a takeover target.
57:36What's so exciting about this smaller cap play versus, you know, just buying a tried and true large cap like TMX Group? — So, full disclosure, our chairman and founder, Murray Stahl, was foundational in founding and assembling the Miami Exchange over the past decade or so, even more. Um but in its current um market it is it came public last year.
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