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.
I’ve had a read back through their June 2018 main market prospectus (they moved from Aim to the main market then, so had to release one). Link is here:
https://www.plus500.com/Docs/Plus500UK/Prospectus.pdf
It’s misleading throughout and full of contradictory and wishy washy statements. They basically lie around their P&L gains/losses from client positions.
Page 59 says that the group earns revenues from gains or losses from client trading positions, but the amount was “marginal” in 2017, 2016 and 2015. $103m our of total revenue of $437m isn’t “marginal”. This amount isn’t disclosed anywhere, and throughout it gives the impression that they generate revenue through client trading spreads plus overnight charges for holding a position. No mention of how big their revenue from market P&L from client wins/losses is.
Amazing that they got away with it!
