Odey Asset Management has already proven to be the most bullish institution favoring shares of Plus500. Prior to news that Playtech made a 400p offer for Plus500, the value- focused Odey had already become the largest single owner of the CFD broker’s stock, having amassed a 21% stake as of last Friday.
Even with the deal in place, Odey hasn’t slowed down its purchases of Plus500 stock, with a filing today showing that as of yesterday’s trading, they increased their stake to 25.49%. The buying occurs as shares of Plus500 spent all of yesterday below the 400p bid price from Playtech, trading most of the day at 375p. Subsequently, shares have weakened today, hitting a low of 340p before spiking above 350p as the filing of Odey’s 25% stake was released.
Market Trading Ideas for May 10-14Go to article >>
Value Play or Higher Bids?
With some questioning as to whether Playtech will be able to finalize an acquisition of Plus500, given the overhang of compliance and regulatory problems the broker is dealing with in the UK, it may be enough to have caused some shareholders to exit the stock. As such, Odey’s continued interest yesterday can be seen as the result of them continuing to see value in Plus500 shares, and that the 400p bid price is solid and provides around 6% upside on any purchases yesterday.
However, as noted yesterday, Odey may be looking for a larger return and expecting a higher bid in the market to materialize. Leading the buying has been James Hanbury, the lead portfolio manager for Odey Absolute Return and Allegra Developed Market funds, each owning sizable positions in Plus500. With a 25.49% stake, Odey has grown its influence large enough that it could block Playtech’s acquisition by convincing just above 63% of the non-Director or Founder related shareholders to vote against the deal.
Beyond Odey, other institutions holding shares include JPMorgan Asset Management, Investec Asset Management, and Hargreave Hale, estimated to have a combined holding of around 20%. Therefore, if those shareholders are aligned with Odey, they should have the ability to either nix the 400p bid, request a higher price from Playtech, or push Plus500’s board to search for additional buyers.