Plus 500 could it be a minus?

Sunday, Jan 13 2019 by
10

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 online provider of Contracts for Difference (CFDs). The Company develops and operates an online trading platform for retail customers to trade CFDs internationally over more than 2,200 different underlying global financial instruments comprising equities, indices, commodities, options, exchange-traded funds (ETFs) and foreign exchange. The Company enables retail customers to trade CFDs in more than 50 countries and in over 30 languages. The Company's trading platform is accessible from multiple operating systems, such as Windows, smartphones (iOS, Android and Windows Phone), tablets (iOS, Android and Surface), Apple Watch and web browsers. The Company conducts operations in the European Economic Area (EEA), Gibraltar, Australia and certain other jurisdictions across Asia, the Middle East and elsewhere. Its subsidiaries include Plus500UK, Plus500AU, Plus500CY and Plus500IL. more »

LSE Price
527.8p
Change
4.4%
Mkt Cap (£m)
598.2
P/E (fwd)
5.1
Yield (fwd)
18.4



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176 Posts on this Thread show/hide all

Elsie 20th Feb 157 of 176

In reply to post #450368

Wilkonz,

You state that:
"There are compelling reasons to believe some of their data is flawed."
Precisely what are the compelling reasons you refer to? 

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UK_Investor_8888 20th Feb 158 of 176

The biggest unknowns are almost the same with any business. No one absolutely knows what the future sales and costs of almost any business will be, until time has passed and its historic.

I think what Wlkonz worries about is PLUS being a bunch of crooks like *nron, *arillion, *alifax, *BS who acted totally recklessly with both their customers and shareholders money.

So far, all that has happened is they had an insanely exceptionally profitable year past, and they aren't going to have an insanely profitable next year and there are two head winds against growth; The EU and market saturation.

It is not news that a CFD gambling platform does hedging. Even Starbucks and Costacoffee does hedging.

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UK_Investor_8888 20th Feb 159 of 176

+8.26% on the day.

Discuss:

A). Bail now on the dead cat bounce, +7.92%, expect the price to be lower than 707 or 680 on Friday or after.

VS

B). Hold, take the Dividend -30% WHT (15% reclaimable), take the hit, wait/hope PLUS recovers.


I genuinely don't know, preference for the latter myself, appreciate others may think the former more likely.

Concern: There's going to be no upward momentum after Friday until they announce something new or someone does a large buyback.

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wilkonz 20th Feb 160 of 176
1

In reply to post #450493

Elsie, if you trawl back to the posts in this thread dated 12th/13th February you will see that there is confusion involving whether sums of £103 million and £172 million (in their 2017 and 2018 reports) are profit or loss. When challenged Plus500 (LON:PLUS) responded that the discrepancies were caused by a 'typo' - this has caused general incredulity and quite a few folks now wonder if we are witnessing a fraud unfold. There is also the matter of the substantial sales of shares by directors. This may be interpreted as a sign that they know something bad is happening and about to be uncovered.

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UK_Investor_8888 20th Feb 161 of 176
2

In reply to post #450568

Even with the typo (indeed this is not acceptable) on the "Profit or Loss" line, there's still a few other lines in the Balance Sheet that matter:

Retentions, Cash, Reserves, Shareholders Funds, etc. I doubt all the other Balance Sheet item columns would have got through publication, the audit, and the analysts... unless you are right and there is a massive stinking fraud going on.

If for a moment the market believed there was something bad, this very second, the share price would be collapsing and almost no-one would be buying, including Odey.

All this means is that the dirt isn't common knowledge at this second in time.

PS: Bill Gates is no longer running Microsoft, Steve Jobs no longer running Apple. I agree with your point but it isn't a certainty that a business founder wants to carry on doing a specific job once they've made a certain massive amount of wealth. I wouldn't! Can we assume that founders only quit because of something bad?

I agree with your nervousness.

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Elsie 20th Feb 162 of 176
2

In reply to post #450568

Wilkonz,
Thank you, I was aware of what you describe.
From your description "There are compelling reasons to believe some of their data is flawed." I had imagined there was something substantive that I'd missed.

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Edward John Canham 20th Feb 163 of 176
1

Since joining Stockopedia I've followed their advice on profit warning (after reading their very persuasive report) and simply sold.

As an addendum to this I then ignore for a month or so and then revisit to see what's there after the dust has settled.

I only mention this 'cos I can't ignore when this thread keeps popping up. I have no problem with this but this is not investing at the moment it's trading - I wish these traders well - but investors can only get involved when they can see what the Q1 results look like.

I've held Plus500 (LON:PLUS) of and on for several years and the one time I was nervous was always arround the dividend.

Have fun.

Phil

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HumourMe 21st Feb 165 of 176
3

In reply to post #449823

On the subject of red flags, two clicks on the Plus500 (LON:PLUS) Stock Report page to “Accounts” and “Directors Dealings” would have given roughly 177 million reasons (the aggregate value of stock sold by the directors despite regular profit upgrade releases since last August) to consider where the smart money was going on this one ... maybe once the tide turns and they start buying that might indicate a bottom is being reached.

A detail that I'd overlooked. How do I overlay that automatically on the charts to minimize my clicking? ;-)

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aflash 21st Feb 166 of 176
1

Uk investor 8888, hw do you feel about a 4% rise on the share price AND pocketing the divi?

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UK_Investor_8888 21st Feb 167 of 176

AFlash, I'm (only) -32.99% down on PLUS.L.

I think PLUS will get back to my break even @11.96.

If it falls, I have fighting funds call-up-able.

With Odey, Morgan Stanley and big fish still buying/holding the company, no sign of fraud (yet), a still sky-high valuation on Stockopedia, and that these are the cleverest Israelis in the world... I'm minded to stay put.

I must say I really don't know how this will go!

I am very confident that the price will fall tomorrow. Those 4.42% of Short Sellers still need to exit...

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AimInvestor85 21st Feb 168 of 176
4

In reply to post #450603

Hi Elsie, re the conversation about data being “flawed”. Look back at some of my posts of last week where I explain how Plus500 doesn’t hedge its clients market positions. Plus500 is positioned the other way from its clients’ aggregate position (ie if clients are long, it is short). It runs a huge risk exposure at any one time, which gives rise to big fluctuations in its revenues. It has always maintained that the impact of this was small, but last week came clean that actually there was a $170m odd market risk P&L gain in 2018, following a loss of $100m odd in 2017. That is pretty substantive.

They explained this lack of previous disclosure as being a “typo” which they were only made aware of last week. That’s utterly laughable. Typos in years worth of annual reports, trading statements, prospectus documents, investor presentations and presumably 1 on 1 investor discussions.... come off it. They were deliberately misleading investors about how the company makes money. So it’s a credibility issue around management. What else isn’t true?

For what it’s worth, I can’t see how this can be some sort of massive fraud. They convert profit in to cash at close to 100%. Cash is pretty easy to verify, you’d hope (previous CAKE shareholders, look away now). And I do think the company is very very good at finding and on-boarding the next wave of punters who want to gamble on the markets. So I’m sure it will always be good at finding new customers (who I don’t think will give two hoots about the share price movement etc).

But it’s just a question of do you trust management. Or more likely, does the current price give me a significant risk-reward ratio to get my reservations? For me, it’s management look like a bunch of crooks. I’m happy to wait to see where the price settles and to see if we find out about more historical “typos”. I’m watching the price closely

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UK_Investor_8888 21st Feb 169 of 176

Shorts Down to 3.58% as of bedtime. This is helpful to shareholders as another 0.9% have withdrawn from the field of battle.

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UK_Investor_8888 22nd Feb 170 of 176
2

In reply to post #450978

"But it’s just a question of do you trust management. Or more likely, does the current price give me a significant risk-reward ratio to get my reservations? For me, it’s management look like a bunch of crooks. I’m happy to wait to see where the price settles and to see if we find out about more historical “typos”. I’m watching the price closely"


Interesting comments:-

But who isn't hiding something in business today? Is there any FTSE 100 super-company not hiding something nasty?

Oil - CO2 is bad for us, exploits the developing world, face the challenge of "electrification".
Mining and coal - very nasty and dangerous.
Banking - Taking fractions off transactions and engaging in multiple complex financial instruments, pumped up by Quantitative Easing public money.
Money lending - giving the poor what they want today at extortionate rates for tomorrow.
Energy - The problem of climate change, incomparable tariffs, and oligopy.
Retail - Oligopy and land banking, and size-reduction, tiny margins, huge risk, huge costs.
House Building - Constraining supply and controlling the land bank, plus abhorrent quality, for the most expensive rabbit hutches, some clad in flammable plastic.
Facilities - Carillion, and charging The Government, NHS, Schools, £1000 for a bog seat.
Tobacco...
Insurance!!!
Automobiles!!!
Medicine
Aviation - Spending £20M to make £1M, in the hope that an Air Stewardess can sell a passenger a drink or sandwich or pay extra to carry a suitcase.
Technology - charging someone $1000 for a smart phone with a glued case so that it can't be repaired when the battery wears out or screen cracks.

There are no surprises that PLUS 500, on a revenue of $720M played and made $170M (24%).

How does a company that states that its Dividend return policy of 20% PA of profits, and out performs most other financial companies, do it without "innovating" and pushing the boundaries?

We've always known that CFD brokers and casinos hedge.

As Ex-dividend day passes, we will find out tomorrow what the market thinks PLUS 500's immediate future is! We don't have to like them or trust them, they just have to make shareholders money!

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UK_Investor_8888 26th Feb 171 of 176

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 176

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 Tue 10:31am 173 of 176

Be concerned, very concerned:

Short Seller positions building again

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

Now 2.49%

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wilkonz Tue 11:44am 174 of 176
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 Sat 2:10pm 175 of 176

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 Sat 5:34pm 176 of 176

Your dad sounds like a highly intelligent man.

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