Plus500 Share Discussion Threads

[financethoughts] 04/12/2018 07:29

Would put Revenue for quarter at around £125m.

[brexitplus] 04/12/2018 07:11

IG GROUP

Revenue in the first half is expected to be around 6% lower than in the same period in FY18, which was a record for IG.

[dumbbunny] 03/12/2018 23:02

Financialthoughts, thank you for the update. The Simon Cawkwell video and the FT articles are well known to longterm Plus500 investors, and I think were discussed on the BB at the time.

As I mentioned in an earlier post, I have seen the short thesis produced by one of the firms currently short.

The thesis sits around events that took place at FXCM in the US in recent years and attempts to draw parallels. In my views, it fails to understand the different business models employed by Plus500 and FXCM at the time. More importantly, it fails to recognise the different regulatory and legal jurisdiction the two firms operate within. Hence, we see the shorts dominated by firms based in the USA.

[financethoughts] 03/12/2018 22:05

nougay, it will be interesting to see IG Group update. Q1 for them was 3m to 31st Aug, so 1m of ESMA. This is Q2, all post-ESMA, September to November inclusive. They won't put out Revenue numbers but I'd expect something in the order of £120m Rev, and they'll be lucky to clear £50m net profit from that - not good for a £2.2bn Co, probably why they have returned -4.7 percent share price return in the last 12m. (PLUS, +78% in last 12m)

[elcapital2018] 03/12/2018 21:55

still wide of the mark

i would have told you, but its clear you would then make it public. you will learn soon

[financethoughts] 03/12/2018 21:47

I reported the other day that I had stumbled across something which might be what ElCap regards the 'biggie' which will send PLUS to zero. I was fortunate enough to receive a private ADVFN message from ElCap within about 15 minutes, and he hinted that if I had found something to do with the 'source of their income', then I might be going 'down the right road'. I sent a reply, deliberately vague as, well, I've no interest in spending my life dealing with trolls and playing games with them.

I do however want to understand why roughly 10 percent of PLUS shares are shorted - amongst the top shorted shares are some obvious dogs, so why does PLUS (a highly profitable and growing Co) also find itself there? Do recall I am a strong supporter of PLUS whilst the financial statements remain as strong as they are. If that changes, my support could change, but I clearly hope they remain a money-making machine as they have been.

I stumbled across a video from Simon Cawkwell (2015) [find it on Youtube] where he says he's had evidence put to him that Plus500 is a scam, and the regulators should investigate. He doesn't say what it is, but it was enough for me to do some digging and see what I could find if I looked for the contrary view.

I found various usual unhappy punters who've lost money with PLUS500, but that's not unexpected and certainly doesn't make them a scam.

I found posts suggesting that PLUS was deliberately changing prices or locking people out of trades at opportune moments. I believe they were throughly investigated in this regard years ago. I support the view given from somebody else on here that they wouldn't risk their entire reputation on this for a few extra million quid, and would have been exposed before now if they were doing it and it were done illegally.

I found posts suggesting that UK investors who failed verification were being approved via the Cyprus office/regulator. I couldn't find anything other than speculation on this, and again, I cannot believe that this would be possible unless it were legal.

Therefore, I disregarded all the above as not likely/not damning/old news.

The final and most interesting item I found was in the comments from the old FT article - clearly some knowledgable people commented on that article (and I know we have some very informed people here) - and what interested me was a comment suggesting that when you give a lot of retail traders (all PLUS traders are retail) high degrees of leverage then circa 90 percent of them will simply blow their accounts, and only around 10 percent will be profitable. If that is the case then, minus spreads, the person/group taking the opposing side of the bet will be profitable 90 percent of the time, and lose only 10 percent. The suggestion made in the comments was that PLUS do not match people to opposing bets, but that they stake the opposing bet, aswell as gain from the spread on the transaction. Would welcome any comments on this. This was most interesting as I (perhaps naively) assumed they were matching opposing CFDs from traders.. which of course they could be if this also turns out to be false.

I found no other items on PLUS and found this the most interesting aspect, so possibly remain unsure why PLUS shares are shorted to the level they are - has been fun watching these positions go further underwater. I would say that any 'biggie' has to fall into the category of ongoing risk (at best) rather than something which is already a problem as the cash generation is clearly real - its been paid to shareholders in buckets for years.

Hope you all take this as intended - as genuine enquiry into any reasons for the level of shorting. All the best, FT.

[dumbbunny] 03/12/2018 15:32

El Capital, if you have concerns about prices and their calculation, you might like to read the Plus500 Summary Execution Policy. In particular Part 4. Further information can also be found on this subject in the June 2018 Prospectus.

www.plus500.com/Docs/Plus500UK/OrderExecutionPolicy.pdf

www.plus500.com/Docs/Plus500UK/Prospectus.pdf

There are further checks and balances in this area under MiFID II and by the FCA and auditors of CFD firms. Regulators now take a very active interest in price creation and formation processes as part of their ongoing oversight.

Three examples:

1) The FCA and FXCM: www.fca.org.uk/news/press-releases/financial-conduct-authority-fines-fxcm-uk-%C2%A34-million-making-%E2%80%98unfair-profits%E2%80%99-and

2) The KNF (Polish regulator) and XTB: hxxp://ir.xtb.com/en/company-statement-regarding-the-fine-from-the-knf/

3)The FCA and Plus500 (page 84 of the prospectus): On 28 January 2018, Plus500UK received a letter from the FCA’s Supervision Division raising a series of questions in relation to its offering in CFDs referenced to Bitcoin. The questions raised by the FCA’s Supervision Division concerned changes made to overnight funding charges and the use of fixed-expiry contracts, both in respect of the closing months of 2017; the clarity of terminology used in communicating information to customers about the overnight funding charges; and Plus500UK’s pricing practices in respect of CFDs referenced to Bitcoin. The Board of Plus500UK provided a detailed response to this letter on 6 February 2018. On the same date, the FCA also sent Plus500UK a statutory information request under s.165 FSMA requiring specified information to be provided by 9 February 2018 in respect of Plus500UK’s provision of CFDs referenced to cryptocurrencies other than Bitcoin. The Board of Plus500UK provided a detailed response to this letter on 7 February 2018.

From a purely commercial standpoint (and remember Plus500’s management and directors are mostly professionally qualified accountants, auditors, and lawyers - and not greedy FX salesman); do you really think a firm turning over c. $700m of annual revenues is going to risk everything by messing around with prices for the sake of a few extra million dollars – I think not.

[noujay] 03/12/2018 15:29

They are after all a Rolls Royce compared to PLUS. I'm certain that I read that somewhere..

[noujay] 03/12/2018 15:28

Interesting to see what IG put out tomorrow

[dj trading] 03/12/2018 09:43

El Cap
Interesting fact for you

PLUS made just O.0344% in spread, overnight funding and profit/loss on 2017 trades (no commission)
Which is pretty amazing when you think what most PIs pay in spread/fees to trade

It's all about volume with $1.3 Trillion of trades placed in 2017.

And when a Company issues a surprise ahead trading statement
Which way do you think the Market will move the price!?
That would have been a good time for shorts to close and new longs to enter at 1320p after the open

And if there are 10% Shorts then there must be 110% Long Positions! Who is right is simply decided by the price and at any point in time 50% of the market thinks the price will rise and 50% thinks it will fall - if not the price moves!

[andrewclarke99] 03/12/2018 09:41

bEl Cheese is due a name change and a new set of figures for his short, that will no longer be underwater

[fenners66] 03/12/2018 09:32

That article has a page with a 52p price target

and an explanation that the business had 52p a share in cash

and a calculation of present value of future earnings of 84 -98p a share.

So why not a 136p target ?

Inconsistent.....

[dj trading] 03/12/2018 09:24

El Cap - 23rd Oct
"Im shorting again this morning. Legging in 1252 averag"
"short increased 1268. it will be fine, im always right"

So if he did actually trade and assuming a modest opening position of £125/point
And that he doubled up to £250/point (1268 ave)
And at least doubled up again soon after to say £500/point

He is now over 200 points down that's over £100k in Margin calls!

So El Cap are they
1) Imaginary trades?
2) Real and you have lost £100k or more?
3) Tiny insignificant punts of a few £s/point and you are just bigging yourself up!?

Only Novice traders
a) average up or down on their losing positions
b) trade based on emotion!!!!!

[fenners66] 03/12/2018 09:05

So in 2015 he was knocking the bull case put forward by Zack


" I recommend reading the report and hope for Zack’s sake that he no longer holds a position in the company."

Meanwhile if he held -same Zack could have made what 400% ?

[fenners66] 03/12/2018 09:01

Short underwater and then decided to post a link to a 3year old article ....... coincidence ?

[rackerrs1] 03/12/2018 08:17

Like we are enjoying watching your huge losses pig filth?Hahahahahahahahaha