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They are not holding $3.3b of cash.
$2.3bn of customer deposits is only one part of the equation. (that cash is then used and becomes cash on the balance sheet or gets withdrawn)
The relevant section is in note 16 of the accounts, "segregated client funds"- 2022 = $272m, this has actually decreased from £350m
The interest they earned in 2022 is 41m* (from the "finance income" in the P&L), so that is approx 3% of the total cash they are holding in 2022 (inc the segregated funds). in 2022 it will be more while the Fed rate is high. (i assume given that the bulk of their cash is USD its the fed rate that correlates with the interest they earn rather than the Bank of england rate)
*I assume the only finance income here is interest on cash
I do not think cfd brokers give any interest to clients! On the own account cash that the market effectively gave no credit for there as there was no return virtually there is now a big return that goes into earnings. Cmc has until recent drops been valued on a pe well above plus and so was looking vulnerable. There have not really been downgraded eps for ig just a pe drop.
whoops -what I meant to say is that I've never really factored the customer deposits into my 'interest earning' calculations. sorry - there's no edit button. Just for clarity.
I don't really count the customer deposits...........but I guess they'll give 0.5% or 1% interest to their customers and keep the balance (2 or 3% if the overall interest rate they're getting is, say 3-4%.) You're right - that's a hell of a lot of money just from that side, never mind the $930mill they've got themselves (or more now, that's an old figure).
So - $3.3billion earning 3% interest is..........£90mill in interest! And ironically, there are only 91million shares in circulation.....
And yet........it's Plus500..........so the market remains reticent at best, downright negative at worst.
There should be a trading update soon so we should get some clarification on how things are going.
Both CMC and IGG have had huge drops on their most recent trading statements so I think the market is being extremely cautious here.
Does no one have a comment on yesterday’s posts? It seems like we could have a sustainable up shift in pre tax of over 100 million dollars due to higher interest rates. Maybe even 100 million post tax. What pe is that earnings stream worth? Even at 10 it is maybe 1 billion dollars?!
First line of the last prelim statement. Customer deposits reached 2.3 billion dollars. It seems cfd brokers give nothing in deposits so if interest rates go up about 4 per cent it is massive.
@ Beauchamp. How do you arrive at $3 billion of cash deposits?
As at 31 December 2022, I get to a figure of $1.372 billion as follows:
Own funds: $930.2m
OTC segregated client funds: $282.2m
US segregated funds: $159.2m
Maybe they just could not keep up that pace they had for a few days without shifting the balance even more to buybacks against dividends. What excites me is over 3 billion dollars of own deposits and client deposits. On a one year view they are probably getting an extra 4 or so percent on those! That is a huge figure when the company has a market cap around 2.1 billion dollars. We have yet to really see this play out. In addition there has been a lot if volatility in markets.
Should I be (we be?) worried - having pointed out the share buying bonanza last month.......it now appears that Plus has significantly slowed the share buybacks.............we're back to the 25,000 a day. Which, bearing in mind the 'low' share price at the moment (or is it high......but we just don't know the facts at the moment and thus think it's low......when in fact it shouldn't be at all) doesn't make sense...........or does it?
Do they know something we don't?
Yes the share buyback v return cash (div) is always a controversial issue.
I'm more ambivalent and i think that poeple who are more pro dividend, esp when the share price is stagnating/falling during the buyback, sometimes forget that the sp (value of their shares) would be even lower still without the buyback.
An overlooked positive maybe during times like these...
I don't think they are cancelled. In fact - haven't a load of the bought-back shares just been given to the Directors (13mill of them?) - have I read that RNS (from 3 or 4 weeks back) right?
I'd just prefer the buybacks to stop and they hand back the money in dividends in all honesty.
Yeah, but those buy back shares are held in treasury and have not been cancelled?
I don't recall reading anything about shares being cancelled. I'm sure not the only one questioning why buy back shares are not cancelled. Or have I missed something?
Q1 trading update due soon will hopefully show continued progress in US + progress in Japan could be referred to as our small acquisition there was made some time ago + global markets have been very volatile,which should help
In all the years I've had numerous shares doing endless buybacks, it's hard to figure out whether they have had any material impact on the share price performance because there are always so many other factors going on which have bigger effects.
Right now confidence in any financial type share is shot to pieces and no amount of buybacks can change that.
132,000 bought yesterday - that's quite a buying spree...............and yet the share price continues to fall................is that because of a misunderstanding of when Plus typically makes money (when the global economy is in tumult) or is there a seller continually dropping shares into the market keeping the price depressed?
Either way - we're under 92,000,000 shares in circulation now. Can only be a good thing for future dividend announcements/yield.
They have upped the buyback rate massively, which must reflect confidence and this volatility must be a bonanza and people are massively underestimating the impact of higher interest rates on earnings on own and client balances. I think the eps estimates are way too low and the shares as well.
Yeah, buy back business is something that gets me scratching my head.
A buy back to keep shares in treasury to award to directors at a later date is not returning capital to shareholders IMO, no?
A buyback only works in our favour if the shares are cancelled, surely?
Why not just award themselves fat cash bonuses or is there some tax efficiency wheeze going on here.
Yeah, yield is looking pants compared to what it was.
Hasn't helped the share price recently. You would think with the vix going vertical there would be some buying here also IGG similarly whacked. I suppose all financials are feeling it right now I know I am!
With the much reduced dividend last time, I wonder if that will drag the share price because the yield now is not very good compared to what it used to be. I would like to see those treasury shares cancelled and not given to directors.
52,000 bought on 13th March, 104,000 bought yesterday. The average (not that I've been looking each day but sporadically over the last month or so and previously) has been 15,000-30,000 generally. 30k a day in the previous window but recently (with the share price rise close to £20) they'd slowed things down to 15k or so. Now we're at £17 they're really going for it.....which should tell us something.
Perhaps they should put an RNS out saying they had no money in SVB to give extra confidence. If I was in their shoes, I would....
I am bullish but an eps estimate always includes everything including interest earnings. EBIT is a different matter. However, I do believe estimates are low due to the massively better returns on cash.
2023 consensus earnings updated this morning on investor relations web page to EPS $2.42Add in $40m of interest earnings (which sit outside and is in addition to EBIT). 12% tax rate. 88m shares in issue at year end and you get EPS of $3.16 (£2.64 at current exchange rate).
@tom79, it looks like the pace of the buy backs has indeed picked up. If the rate of the last few days is the new rate, this equates to c. $12m a month and would be a six month buy back completing at around the time of the interim results in mid August.
Why are we getting so many trades of 1 share, 2 shares, 3 shares? Hence the number of trades are very high, over 2000.
Thanks, I didn't study the RNS closely enough. 10 months for $70M so $7M per month. Roughly 22 working days per month so $318.18k per day. $318.18k/1.2 = £265.15k 265.15k/£18 = 14,730 shares.