Plus500: 653p
You may remember last December the FCA announced it was ready to impose regulations on CFD companies and the sector duly went down in flames. As the ashes were being kicked over in the following weeks one company was repeatedly singled out in articles as the bad boy at the back of the school bus smoking a cigarette who'd caused all the trouble, and all the rest were veritable choirboys in comparison. That trouble-maker who had attracted unwanted attention was Plus500 (LON:PLUS) if you hadn't guessed already.
I was immediately interested in these companies as a contrarian and took on board the general sentiment and invested in head-prefect/choirboy IG Group (LON:IGG) and it recovered nicely. I couldn't shake off that amidst all the indignation were occasional back-handed compliments. Plus500 might be too streetwise for their liking but was admittedly shamelessly good at making money, shoring up with a well-written RNS and distributing prodigious amounts of dirty money in the form of massive interim, final and special dividends. So huge that early investors had made all their investment back in divs alone regardless of the share price rise over time.
I eventually said thank you to IG and changed horses in mid-stream. It's been my best decision so far, but a bit of a dirty secret (until now). It's not got a good rep,has it? Even forums are strangely quiet as the rise goes on and on, it's as if no-one wants to admit buying. There may also be the fear-factor at work. Every day without a major wealth-damaging pull-back is a good day. So keep quiet, don't tempt fate... It's my learning opportunity in holding onto a winner, something I'm invariably rubbish at.
Fast forward to today and Berenberg upgraded its rating on Plus500 to 'buy' from 'hold' and lifted the price target to 725p from 560p as it said "cash flows could be undervalued". Brokers have been left behind in recent months with the share price leap-frogging their targets. I wonder if it can make it that far sooner than they think. Or will it be 72.5p next week? (The $10m share buy back which commenced in June and runs to the end of August hasn't hurt either.)
Anyway, the FCA unexpectedly backed off…
