Plus 500 could it be a minus?

Sunday, Jan 13 2019 by
11

Having been out of the market since October 2017, as mentioned here at the time, it is obvious that I am a cautious investor, which perhaps comes from my many years building a financial services company. I am not ready to buy back in yet, but I have been preparing the way and looking at companies that I believe may make good investments. Plus 500 stands out like a beacon of light. As I completed my analysis, I wanted to buy there and then but it was Saturday--an almost perfect company, the thought flickered through my mind “if it is too good to be true” but I dismissed it immediately. When I awoke this morning, Plus was on my mind and I was directed to the Stockopedia blog. I tend to take notice of such happenings as they have both saved and made me money in the past—and there it was an observation from Ed Croft dated 30th May 2018 directing me here https://ftalphaville.ft.com/2018/05/29/1527566400000/Plus500--past-performance-is-no-guide-to-the-future/ with an associated further article. I returned to my desk and wrote across the analysis sheet “they would say that wouldn’t they”!! and binned it.

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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Plus500 Ltd is an Israel-based company that develops and operates an online trading platform for individual customers to trade contracts for difference (CFDs). Its online trading platform allows its customers to trade CFDs on over more than 2,200 different underlying global financial instruments comprising equities, indices, commodities, options, exchange-traded funds (ETFs), crypto currencies and foreign exchange. The Company enables individual customers to trade CFDs in more than 50 countries. The trading platform is accessible from various operating systems, such as Windows, iOS, Android, and Surface, as well as Web browsers. more »

LSE Price
604.61p
Change
3.7%
Mkt Cap (£m)
660.3
P/E (fwd)
5.2
Yield (fwd)
17.2



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190 Posts on this Thread show/hide all

UK_Investor_8888 26th Feb 171 of 190

https://shorttracker.co.uk/company/IL0011284465/

Shorts now reduced to 2.64%.

I expect there's some more filings in the pipeline. The share price has stabilised now.

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UK_Investor_8888 5th Mar 172 of 190

https://shorttracker.co.uk/company/IL0011284465/

Shorts now reduced to 1.77%.

"For you, Shorters, ze var is over."

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UK_Investor_8888 16th Apr 173 of 190

Be concerned, very concerned:

Short Seller positions building again

https://shorttracker.co.uk/company/IL0011284465/

Now 2.49%

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wilkonz 16th Apr 174 of 190
1

These shares don't look good I'm afraid. I sold my holding at a 32% loss some time ago and I'm certainly not thinking of buying more now that the price has fallen to 515 from a 52 week high of 2076. They could have a lot further to fall.

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UK_Investor_8888 20th Apr 175 of 190

I'm 53% down... not happy.

Not chosen to bail yet. My Dad did. In hindsight...

Fingers crossed their fortunes change. Buying no more.

Shorts currently 2.29%. NOT a good omen.

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wilkonz 20th Apr 176 of 190
1

Your dad sounds like a highly intelligent man.

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timarr 21st Apr 177 of 190
2

In reply to post #470711

Not chosen to bail yet. My Dad did. In hindsight...

Just out of curiosity, why haven't you sold yet?

Plus500 (LON:PLUS) is down 60% this year, and 75% since its peak last year, on the back of multiple profit warnings, some pretty dodgy looking reporting and with massive director sales before everything went wrong.

This thing has so many red flags attached it looks like a Soviet style military parade ...

timarr

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wilkonz 21st Apr 178 of 190
2

I agree with timarr. We all know how difficult it is psychologically to accept a loss but sometimes it just has to be done before the loss gets even larger. We're in a bull market at present and most stocks are rising whilst Plus500 is plunging. Almost anything - statistically speaking - would be a better bet than Plus500 (LON:PLUS).

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mandragoran 22nd Apr 179 of 190
1

Plus500 (LON:PLUS)500 Did you notice Thursday, Odey added a huge CFD bet at 9.89% on top of the shares that he bought - 9.24%.

Me suspects he knows something we do not?

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Howard Marx 22nd Apr 180 of 190
7

In reply to post #470831

Odey was buying Plus500 (LON:PLUS) at £18 last August, so no suprise to see him still buying after a 70% drop in the share price.

His investing mantra must be "when in trouble, double".

But his medium-long term track record suggests he knows very little:

5cbdc0125216fodey1.jpg


To quote Paul Tudor Jones: “Losers Average Losers


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UK_Investor_8888 23rd Apr 181 of 190

Simple whilst I haven't sold:

I'm on the hook for too great a sum if I do.

Yes, I know: A serious error of my making. I have fallen so far, as to be almost moot were I to quit now. The rest of my portfolio looks good at the moment.

There are only two hopes for me:

1. The far east - If those clever Israelis are working on opening up the far east...
2. PLUS is an orthogonal share - makes money out of turbulence rather than equity bull runs...

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ken lowes 23rd Apr 182 of 190
1

In reply to post #471036

Perhaps you should work out the growth rate that this company needs to achieve and ask yourself what are the chances? Then sell put the money where you think there is a better chance of seeing a profit sooner rather than later. Would you buy this share today knowing what you now know if the answer is yes stick with it. But as I said when I wrote this piece its not for me so i am a little biased. good luck

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timarr 23rd Apr 183 of 190
8

In reply to post #471036

I have fallen so far, as to be almost moot were I to quit now.

Well if you're 53% down that doesn't sound like too far to get out. As someone much wiser than I once said: "no matter how much you're down, you can still lose another 100%". I ignored them and proceeded to lose the remaining 100% (Marconi if anyone's interested).

As regards investing in Plus500 (LON:PLUS) then I'd consider the following red flags:

  1. Israeli domiciled.
  2. Its returns were always high compared to listed competitors such as IG Group (LON:IGG) suggesting that it was probably taking more risk to earn those returns (although it claimed it wasn't).
  3. New regulations specifically targeting companies like PLUS who rely on high churn of customers, making it more difficult and expensive to acquire them.
  4. Massive, co-ordinated director sales.
  5. Subsequent multiple profit warnings.
  6. Issues with regulatory announcements misstating their market positions with regards to risks being taken (see point 2).
  7. Interest by shorters - which isn't always a sure guide, but given short side exposure is far greater than the 100% potential loss you're exposed to usually indicates something to be concerned about.

So the real question is, given the value of your remaining stake, is if you had the cash in hand would you invest it in a) Plus500 (LON:PLUS) or b) something else?

Investing in stocks is never simple. We can make the right decisions and lose money and the wrong ones and make it. The mental challenge is to not look back and regret the decisions you've made. Personally I find it far easier to accept my past failures when I made a logical, if ultimately erroneous, decision than if I made an illogical and equally stupid one.

Best of luck whatever you choose.

timarr

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wilkonz 23rd Apr 184 of 190
3

As Martin Zweig once said: There’s no such thing as a share that’s too expensive to buy or too cheap to sell.

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UK_Investor_8888 14th May 185 of 190

WTF!

Stockopedia's 2019E Yield Estimate is now showing 17%.

I don't believe it!

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wilkonz 15th May 186 of 190

Hopefully the dividends will compensate to some degree for the recent fall in price. But I wouldn't rely on it.

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Snoo 15th May 187 of 190
2

I assume that PLUS might be doing OK due to the recent resurgence in crypto - this was the source of the revenue spikes a couple of years back. I am sure that was in a bull market. That type of stuff is well-suited to them (and less well suited to serious players like IG).

But today I don't know if we can be sure if they are not hedging their trades. In which case, the recent rise would be bad for them.

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rpannell 15th May 188 of 190
1

I've been much more positive than most here on PLUS, and have been using the recent lows as a buying opportunity.
I don't like the directors' mis-reporting on trading risk and do regard this as a red flag. However, I am not too concerned about this trading risk. If I was running a company like IG Group (LON:IGG) or PLUS, I know that I would be trying to access the entire buy/sell spread rather than just the small extra spread for the CFD. The main buy sell spread is where the large money is to be made. Yes, this does mean taking on some extra risk but this can be mitigated by having some shares with an overall long position and some with an overall short position. Even if all long, the extra risk would be the average market gain, so around 4-8% per year. This would easily be made up by the extra commissions made on the buy/sell spreads.

So, to summarise, I still see PLUS as a high quality company that will throw off lots of free cash over the coming years.

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