This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Plus500: Buybacks, Fat Cat Pay and Profits Warning

Superstar share Plus500 has plummeted back to Earth. This super stock rose from a price of £3.14 5 years ago (14 Feb 2014) to a high of £20.76 and following a profits warning has dropped to £10.88 today 13 Feb 2019.

Tom Winnifrith has commented on this company and the dangers of investing in companies where 80% of their customers lose money. I agree with him, this cannot be a recipe for long term success.

But are the directors stupid or have they misled the market?

The latest news and the profit warning are reported in the Daily Mail, 12 Feb 2019, https://www.thisismoney.co.uk/money/markets/article-6695269/Plus500-good-true-Shares-lose-value-EU-crackdown.html. One has to ask should the directors have seen this coming and issued a profits warning earlier?

 

The second piece of this jigsaw is the pay revolt: Online trading firm Plus 500 angers shareholders by ramping up the potential pay of its boss and finance chief by more than £4.1m, reported the Daily Mail on 21 January 2019 https://www.thisismoney.co.uk/money/markets/article-6616697/MARKET-REPORT-Plus500-investors-rebel-row-fat-cat-pay.html. I ask why were the remuneration committee making such a proposal just before a profits warning? Were they aware of the forthcoming profits warning, or were they aware of a non-trivial  probability of a profits warning being needed?

The third jigsaw piece is that the company has been buying back its shares. This is an issue that always concerns ShareSoc. as recently as 23 January 2019 Plus500 Ltd. purchased 10,000 shares  through Liberum Capital Limited at volume weighted average price paid per share of 1,488.23p. Previous purchases were

Insider Transaction Type Value Date Shares
PLUS500 LIMITED Buy Back at price 19.28 per share. Direct 192,800 22-Jan-19 10,000
PLUS500 LIMITED Buy Back at price 19.31 per share. Direct 96,535 17-Jan-19 5,000
PLUS500 LIMITED Buy Back at price 18.98 per share. Direct 379,560 15-Jan-19 20,000
PLUS500 LIMITED Buy Back at price 18.81 per share. Direct 94,030 14-Jan-19 5,000
PLUS500 LIMITED Buy Back at price 18.69 per share. Direct 93,435 10-Jan-19 5,000
PLUS500 LIMITED Buy Back at price 18.86 per share. Direct 188,619 09-Jan-19 10,000
PLUS500 LIMITED Buy Back at price 18.81 per share. Direct 376,160 08-Jan-19 20,000
PLUS500 LIMITED Buy Back at price 19.00 per share. Direct 380,020 07-Jan-19 20,000
PLUS500 LIMITED Buy Back at price 16.22 per share. Direct 243,344 17-Dec-18 15,000
PLUS500 LIMITED Buy Back at price 17.89 per share. Direct 357,740 05-Dec-18 20,000
PLUS500 LIMITED Buy Back at price 18.64 per share. Direct 323,546 04-Dec-18 17,353
PLUS500 LIMITED Buy Back at price 18.27 per share. Direct 182,740 28-Nov-18 10,000
PLUS500 LIMITED Buy Back at price 18.10 per share. Direct 181,010 27-Nov-18 10,000
PLUS500 LIMITED Buy Back at price 16.56 per share. Direct 331,240 19-Nov-18 20,000
PLUS500 LIMITED Buy Back at price 16.35 per share. Direct 498,061 16-Nov-18 30,455
PLUS500 LIMITED Buy Back at price 16.91 per share. Direct 137,925 05-Nov-18 8,155

Also interesting is the sale by Alan Gonen of 2,250,000 shares on 13 Dec 2018 at £13.90.

This was preceded by sales by Gal Haber and Michael Fairburn at somewhat better prices.

Director/Date/Type Amount  Price (Pence)   Value ($) 
Mr. Gal Haber 1,200,000           1,550    18,600,000
06/09/2018 | Sale
Mr Michael Charles Fairbairn 7,500           1,803         135,257
15/08/2018 | Sale
Mr Michael Charles Fairbairn 10,000           1,820         182,000
15/08/2018 | Sale
Mr Michael Charles Fairbairn 29,500           1,818         536,310
15/08/2018 | Sale
Mr Michael Charles Fairbairn 3,000           1,809          54,280
15/08/2018 | Sale

Buybacks of shares at times close to when directors are selling shares are a concern. With the benefit of hindsight, it would have been better to delay the buy back programme and do it at the current much lower price.

This is clearly not a share for the risk averse.

 

Cliff Weight, Director, ShareSoc

 

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