Ig Share Discussion Threads

[tourist2020] 26/1/2021 14:09

Bought at 7.82

Thoughts on valuation: if IGG had instead of buying Tastytrade bought a can of tomatoes from Sainsburys (ie worthless) you might expect a share price fall of 16% for the new shares issued and 4% for the cash consideration.

Based on an expected share price post excellent results of 9,00 (conservative) that gives a theoretical share price of 7,20 post acquisitiono of a can of tomatoes. Tastytrade may not be worth a billion dollars but it sure is worth more than a can of tomatoes.

7,80 seems like an excellent mid to long term entry point. They will probably be a FTSE 100 candidate in June post closure which could provide support or even impetus while we await the full year results, which are unlikely to be bad since we are all at home trading and posting on these threads. :)

Just my tuppence worth.

[flagon] 26/1/2021 14:00

Added some to the pot.

[chess123] 26/1/2021 09:43

Was expecting a rise because of the forthcoming Diviedent, but seems to be going in the opposite direction, wonder when the share price will show any signs of recovery.

[dennislevine] 25/1/2021 18:19

Just surprising that institutional shareholders can let IG Group spend US$1 billion on an acquisition with such limited disclosure of the target company.

A few slides added on Tastytrade in the recent interims results; what are the quality of revenues / earnings ?

Hard to tell.

2020 revenues of $116.2m but how is that derived ? % from Tastyworks, the brokerage - don't know. Does the financial media / video side make revenue - if so how. For such a major change in the business of IG Group and at a cost of US$1 billion, there's not much detail in my view.

[tourist2020] 25/1/2021 18:12

Yes, looks like you are right Dennis, I jumped to that conclusion from the quantity (%) of shares being issued, but I guess the fact that they are being issued to a few people only, and not to the public, would make the issue exempt from requirements for a prospectus. Thanks for pointing that out.

[apad] 25/1/2021 18:12

dennislevine,
I keep slaughtering goats and lighting candles to conjure an activist institution.
I dance around fires chanting June Felix is a pillock.
It ain't gonna work is it!
apad
😊

[dennislevine] 25/1/2021 18:03

2855 "Tourist2020: We will be able to see better when the prospectus is released.. "

It should be noted that there is no more disclosure forthcoming on this acquisition from IG.

The $1 billion acquisition of Tasytrade does not require a shareholder vote.


From IG RNS on 21 January:

"Completion of the Acquisition is anticipated to occur in the first quarter of financial year ending 31 May 2022, subject to satisfaction of customary conditions. These include receipt of relevant anti-trust and regulatory approvals from US regulatory bodies, including FINRA, as the Acquisition involves the acquisition of 25% or more of a registered broker-dealer."

[energeticbacker] 25/1/2021 16:20

Featured in today's Investor's Champion update – The full year outlook remains in line with current market expectations.

Research house Progressive Research forecasts revenue for the year ending March 2021 of $835m, adjusted (no doubt heavily!) pre-tax profit of $35m and adjusted eps of 25.5cents – not reporting now is in US dollars.

[coxsmn] 25/1/2021 15:27

We have been told to expect earnings in the low single digits. Whats missing is any future guidance beyond this.

[tourist2020] 25/1/2021 15:21

If you look at the Press Release on the Acquisition, you will see the comparatives for Revenue, EBITDA and Net Profit before Tax. In 2019 the NBT was higher than EBITDA which is highly unusual, the only thing I can think of is that they had a large interest-like income or a write back of depreciation. We will be able to see better when the prospectus is released but I wouldnt focus on the NBT figure as the only performance trajectory indicator.

[coxsmn] 25/1/2021 13:19

valued at PE of 28, growth of 5% from dec 2019 to 2020 doesn't impress.

Also the bubble of high multiple valuations on US stocks could burst.

[tourist2020] 25/1/2021 12:35

Whilst the PE ratio is high in relation to that of IGG I think its worth comparing with say the NASDAQ average, which is around 40. The US market,and in particular the technology and growth sectors have this price tag. Either you pay it or you don´t enter the US market. With $50m of PBT and (conservatively) a 30% tax rate, IGG is paying a PE ration of 28. Its not out of step with the market,in fact its below the market average. Whether it is value accretive for IGG time will tell, as many have pointed out.

[scrwal] 25/1/2021 12:23

Unfortunately the share price is also linked to the tasty performance and if that doesn't beat market expectations we are in for a torrid time.

[luderitz] 25/1/2021 12:10

The truth about all these questions is bound to come out in the course of time but until it does the share price suffers.

[chess123] 25/1/2021 11:12

I think the biggest concern for holders of IG , is not the name but the price paid, also IG share price says it all.

[tourist2020] 25/1/2021 10:59

While the name of the acquired business may not be to our "taste", folks might like to take a look at their customer feedback: hxxps://www.investors.com/news/tastyworks-stocks-options-trading-12-reasons-why-newcomer-made-best-broker-rankings/

[chess123] 25/1/2021 10:44

coxsmn. Agreed IG seem to have lost the plot, how they decided to buy tasty at such a high price is beyond me, But as you said its great for Tastytrade .

[coxsmn] 25/1/2021 10:33

Chess,I agree.I can't find anything to support the high offer price. It seems like an excellent deal for Tastytrade.

[chess123] 25/1/2021 10:20

Strange IG keep the Dividend at 12.96p, trying to look prudent , then they splash out 1 billion on Tasty , i think this deal is way overpriced, could maybe have swallowed it at 600 million, can see the share price struggling to get back above 800p

[energeticbacker] 25/1/2021 10:05

IG's latest results certainly look satisfactory according to Investor's Champion, but they suspect it's too soon to be sure of what will happen when markets really do calm down. Indeed, the board's decision to leave the interim dividend unchanged at 12.96p per share seems to suggest a prudent measure of caution.

Investor's Champion chose this stock for their Income Boosters portfolio as a counter-cyclical pick that should do well in difficult markets. This thesis has held up well over the last year.

[coxsmn] 25/1/2021 09:54

The acquisition announcement rns gives a dec 19 to dec 20 growth figure of 5%.

If Tastytrade was in high growth we would be seeing double figures.

This suggests to me the rate of customer acquisitions at Tastytrade might already be starting to plateau?

[its the oxman] 25/1/2021 09:22

I'm sure they expect tastytrade to continue growing fast. If it does I guess doubters will be proved wrong and ig could move up considerably. Can't see why growth won't continue myself, a lot of conservative holders will be churning out , top of cycle acquisition acquisition does play well, so need a few weeks to see where we end up. Hoping it's not sub 800p. Still get a nice div here.

[muzmanoz] 25/1/2021 08:46

when I logged on to my IG spread bet account this morning it says I can now trade us equity options. Is this to do with the acquisition?

[coxsmn] 25/1/2021 08:44

I still can't understand a $1bn acqusition delivering only $46m yr pre tax profit. Unless they expect a very high growth rate for tastytrade?