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11 February 2021
By Maynard Paton
For some time now IG Group has been flashing on my SharePad filters.
According to my screens, the spread-betting firm offers:
- High margins;
- Decent returns on equity;
- Cash-rich accounts;
- Attractive five-year growth;
- A lack of past acquisitions, and;
- A modest P/E.
Those characteristics are an unusual mix in a market presently bereft of obvious quality bargains.
Let’s take a closer look.
Read my full IG Group article for SharePad.
Maynard Paton
Maynard, Reread this article after recently offloading a chunky holding of IG Group. I’ve held this twice now from the 5XX level and selling out close to 9XX.
The TastyTrade decision doesn’t sit right with me, nor the price paid and the timing of it at the top pf the market. I’m also in the dark on June Felix and wonder if her actions are more to do with being seen to do something, rather than doing the right thing which might look a little less sexy.
I hadn’t noticed the director compensation issue you pointed out, but that and the market top of the trading environment has forced me to change tack mentally and take profits for a second time. I guess IG is very likely to continue being cyclical and maybe a major downturn will see the number of punters collapse.
Margins across the group are undoubtedly going to fall by the very nature of the TastyTrade business being somewhat lower quality. The omission of the objects you pointed out also look ominous. Often it is what is not written that matters.
The characters in the photos do make me wonder, perhaps they will lose interest now that they have bagged the elephant (Wall St Speak).
Gamesinvestor
Hi Gamesinvestor,
Thanks for the comment. Can’t really disagree with your view, especially as some of the market froth has evaporated since the tastytrade purchase. IG ought to survive/prosper over time as it attracts a seemingly never-ending supply of new enthusiastic clients, but the immediate ride may be bumpy due to the points you mention.
Maynard