The foreign Exchange and CFDs trading industry has been under pressure since the start of the year. This has been primarily driven by the rollout of the new regulatory restrictions over the business of retail brokers. One company which has been particularly keen to invest in the space is Odey Asset Management.
The firm at one point owned over 20% of the shares of Plus500. As the company was in crisis mode at the end of 2015, the fund voted against a takeover attempt by Playtech. Today, a filing with the London Stock Exchange shows that Odey Asset Management has instead started building up a stake in the gaming and financial trading giant itself.
Playtech’s shares have lost about half of their value since a peak in June 2017. Today’s move shows that the company is becoming attractive once more on an institutional level after months of declines.
Listed firm Plus500 has been bucking an industry-wide trend in recent quarters. Despite some hiccups along the way, the Israeli brokerage has by far been the top performer over the past several years too.
The company’s shares are trading 25 percent lower since a peak marked in August. But Plus500 marked incredible growth when compared to its industry peers. The latest run higher has largely been because of the firm’s timely entry into the crypto market last year.
Shares of Publicly Listed Brokerages
Performance of publicly listed brokers when compared to Playtech, Source: Yahoo Finance
Looking at the chart above we see that the performance of retail brokerages across the spectrum has been a mixed bag. Plus500 shares rose 73.5 percent over the past year, while IG Group rallied a touch over 42 percent.
An investment in GAIN Capital returned to the company’s shareholders about 17 percent and CMC Markets has been at the bottom of the pack with a 9 percent increase over the past 12 months.
Playtech is a clear outlier here with the firm’s stock dropping 47.5 percent over the same period of time. The company’s stock last traded at these levels back in 2013.
Tedi Saggy's Exit Timing
The main difference between Playtech and the other companies discussed in this article is clear. The gaming business of the firm has been at its core since it was founded by Teddy Sagi in 1999.
The company got floated in 2006 at a valuation of $950 million. Around the time when Sagi chose to exit the firm and sell his stake, Playtech's market cap was £3 billion.
If this is not a testament to Mr Sagi's ingenuous business sense, I don't know what is.
