Morning folks!

There's a huge quantity of updates out today.

Final list:

Timings: finished at 4.30pm.

CMC Markets (LON:CMCX)

  • Share price: 160.6p (unch.)
  • No. of shares: 289 million
  • Market cap: £464 million

Q3 Trading Update

I'm experiencing some regret this morning, when I see that that the share price for CFD provider CMC has nearly doubled since I sold out of it last August.

At least CMC was only ever a tiny shareholding. I've maintained a larger position (currently 8% of the portfolio) in the lower-risk IG Group (LON:IGG), which has also been performing well - although not nearly as well as CMC, in recent months.

CMC issued a blow-out interim report in November - net revenue increased from £63 million to £85 million. Thanks to operational leverage, this translates to a big percentage increase in the bottom line!

Digging into the presentation slides for that report, we learned that the company was using technology "to make better informed hedging decisions".

It admitted that it was hedging less frequently, and I was left with a question mark hanging over whether CMC was as safe as it was before, or whether it was moving into risky territory (the sort of territory which Plus500 (LON:PLUS) inhabits). 

It would be surprising if CMC has started to act irresponsibly - in their next annual report, I'd like to see a clear statement regarding how much market risk they are exposed to, i.e. what percentage of total client trades is hedged (internally or externally), and what is the percentage of residual exposure.


Today's update implies that hedging costs and hedging losses continue to reduce in Q3, having already reduced dramatically in H1:

Net operating income continued to outperform expectations in Q3 2020. The strong performance was driven by higher retention of client income in comparison to H1 2020.

Also worth noting:

This resulted in higher revenue per active client despite lower client income due to the…

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