Storm in a TCAP, or is Trouble brewing?

10th Jul '18 by mmarkkj777

13 comments 4113 reads

TP ICAP are down 36% today as I write. CEO resigns as the costs of integrating the the company and Bexit associated costs seems higher than originally thought (in May, when it was stated that everything was on track) reducing expected cost savings from synergies.

Chairman was already set to retire in December of this year.

Again, I can't help wondering if this correction is overdone. The company is now twice the size through M&A activities, can it really be worth half what it was in March? Obviously earnings will take hit, but will the new management be able to get back on track?

I will be watching for a possible bounce-back, but I can't see where the bottom is yet.

Anyone got any further insight into TCAP?

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Mmarkkj777

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I have been investing for a long time, but have become more serious about my investments over the last 3 years and am looking to use Stockopedia tools and info. to help maximise my gains. I have a Portfolio of 14 Buy and hold companies: 3 US, 1 European and 10 UK. I have held one for 20 years and one for 14 years. In the last few months I have added a growth portfolio (at least I hope they will grow!) . It is now up to 6 stocks.More recently Oct 2018, I have reverted to cash for a substantial part of my portfolio (over 2/3rds). I'm now looking for bargains and opportunities to reinvest. more »

13 comments

hayashi22

10th Jul '18

think ceo was sacked not resigned..no big loss as useless

mmarkkj777

10th Jul '18

Hi Hayashi22,
Do you know anything about new guy, Nicolas Breteau, who has been promoted from within?
According to the report, synergy savings between now and end of 2019 are reduced from £200M to £175M, which simplistically means the bottom line will be affected by £25M over 18 months (if it stays like that).

aflash

10th Jul '18

Support 237p = July 2014 Low

Support 219p = Nov 2012 Low.

I shall be waiting for one of those.

The Fundamental problem I have with this company is that it is the Telephone Trading Rump of ICAP built by that genius Michael Spencer.
I understand the inter-institutional market uses the phone much more than than the less professional retail sector. Nevertheless Technology changes.
Maybe you can dispell that notion while we wait on events. What does the future hold for this lot's products?

mmarkkj777

10th Jul '18

Hi aflash,

If you mean me, I'm not on here to dispel notions. I don't actually have any prior knowledge of this company, hence my question above about the new CEO, just announced.

Have you held this stock previously?

It would seem approx. half of the new company comes from its merger with ICAP and its broker-to-broker phone based services. I agree technology changes, but does that mean that Icap had no residual value? What about the TP part of the business? Both the support levels you mention are for TP only (Prior to ICAP merger). Just an observation, not saying these are not appropriate levels to watch for.
Anyway, time will tell. Not sure what the future holds for their products and services.
As for future earnings.....their past earnings have been up and down like a yo-yo.
I just cant help thinking that in the right hands, this business must be worth a lot more than the current price, hence my interest in the pedigree of the new CEO.

GreyInvestor

11th Jul '18

I’ve just bought back in, a modest holding, having believed that the price had previously gone far too high. Assuming that the business can generate EPS of 30p, the price seems reasonable.
The business thrives on volatility and dealing. Both are at a low ebb.
Yes, the business will also need to invest a lot more in IT. A lot more. But on the other hand it may well be a sitting duck for a bid.
The weakness of the business in my view is that the action is in post trade work. This is trading work, which nowadays is less valuable and needs more capital.

mmarkkj777

11th Jul '18

I've just bought after they dipped 5% this morning at 8:05 (also a modest holding).

I think a realistic target is 350 to 375p, lets hope the new CEO can do the business. Invest in the infrastructure and get a large proportion of the synergy savings from the merger.

hayashi22

11th Jul '18

New ceo is said to be more hands on and much more of a detail man than the big time charlie who got sacked. should be able to drive cost savings and integration process.

aflash

11th Jul '18

Useful comments but nobody mentioned that other genius Terry Smith who took control of the shares of Tullett Prebon, built up the business and then moved on. Not sure about the new owners/managers/directors hence my question.
Take somebody's point about Lows being pre-merger so a Technical Analysis of recent movement would be relative to the

2016 July Low = 271p

Textbook technique means waiting until that level is exceeded to follow the trend back up.....Failing that trend remains to the downside.....
With RSI at 13,99 stock Oversold

On the Fundamental side comparaison with others problematical. I looked at E-Trade (NSQ:ETFC), Charles Schwab(NSQ:SCHW), TDAmeritrade(nsq:AMTD), all with retail bias + (NYQ:RJF) on the US side.
IGG, PLUS and CMCX in UK all slightly different businesses but much better quality.

The 'Brexit' part of the profit warning is valid if all the interdealer business moves to FrankFurt and Paris.

I shall Punt hoping for Short Covering but do not expect previous levels.
Never buy for Bids or Income.
(All Notes to Myself)

mmarkkj777

11th Jul '18

Thanks Hayashi22 and Aflash.

All interesting observations. I'm already in and I hope not too early.

I'll be watching with some interest. Especially news on new CEO.

mmarkkj777

16th Jul '18

TP ICAP (LON:TCAP) shares seem to be rising again. I'm hoping we have seen the bottom of the dip. Interestingly Old Mutual has just bought 24M shares (on Friday).

lynne martin

7th Aug '18

Barings LLC disclosing 15.2% stake in TCAP -
WWW.sec.gov/archives/edgar/data/9015/000000901518000022/bbdc.txt
Peel Hunt has just upgraded shares
Plus 15 analysts covering it have 8 buy rating, 1 sell and 6 hold.

Twitter is all of a flutter this morning - so I nervously bought a small 1k stake, it yields 6% which is more than my bank account - Hopefully the momentum will reverse in the upward direction.

Square Mile Junky

7th Aug '18

The CFO was replaced November 2017.

If you check their website you will discover their COO has left and an interim was appointed 3rd August 2018.

So CEO, CFO, COO......

mmarkkj777

8th Aug '18

Hi SMJ,

The share price has recovered 12% since I first posted this discussion.

Maybe the market thinks this is a new broom sweeping?

Do you know anything about the new incumbents?

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Storm in a TCAP, or is Trouble brewing?

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Mmarkkj777

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