JPMorgan's Plus500 Ownership Above and Back Below the 10% Threshold Explained

Plus500's share price has dropped by about 12% after a rally triggered by the Q1 trading update earlier this month.

plus500 logoAccording to recent regulatory filings in the matter of just 24 hours the share of JPMorgan ownership in Plus500 has gone up above 10% and dropped back below the reporting threshold. This event pretty much concludes the discussion about whether JPMorgan Chase is holding the majority of its share in the company by itself, or its brokerage arm is purchasing that for investors. An investment decision in an asset management firm simply doesn’t change within a day, unless all hell has broken loose, and this doesn’t seem to be the case with Plus500.

Plus500’s Never-ending Rally

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jpmorgan-800wiThroughout the last couple of weeks, after Plus500 placed a secondary offering, the company’s holdings have trespassed certain levels which triggered regulatory filings – first it was the 4% trigger that unveiled that JP Morgan’s Asset Management arm was holding a 2.7% stake in the company, while its brokerage arm JP Morgan Securities owned merely 1.3% of the company’s float.

As the next threshold standing at 6% was reached last week, JPMorgan’s Asset Management stake has risen to a total of 3.2% (still below the first regulatory threshold) while clients of the JPMorgan Securities brokerage arm have increased their activity bringing the total holdings to just above 3.6%.

This past couple of days serve as an explanation behind the stated interest by the American multinational’s interest in Plus500, as yesterday another threshold was breached at 10%, which triggered a new regulatory filing, revealing another substantial rise in the shareholdings of the brokerage arm to 6.7%, while JPMorgan’s Asset Management division interest has in fact remained rather consistent at 3.3%.

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From the events so far, we could conclude that the interest in owning Plus500 stock is not coming from the bank itself, but rather from JPMorgan Chase’s clients. Considering the vast interest of the bank’s clients in this particular stock, we could conclude further that JPMorgan could be advising its clients to purchase shares of Plus500, after all positive results for the last quarter of 2013 and the trading update for the first quarter of 2014 have been nothing short of stellar.

Is This a Turning Point?

The latest batch of regulatory filing data dated from today might be showing a turn (unless we see another TR-1 filing next week). The brokerage arm has disposed of more than 200,000 shares in a volatile day for this stock yesterday where at one point Plus500’s share prices were trading about 5% lower. In the meantime the company’s share price has dropped by about 12% from the post Q1 trading update peak at 707 pence.

It’s worth keeping an eye on the next batch of trading volumes data and price developments to determine whether this latest turn of events is a real turning point, or rather a fresh buying opportunity in taking hold of Plus500 shares. Tracking data related to ownership stakes through London Stock Exchange’s website could also help, as the threshold reporting mandates were triggered quickly on the upside, which means that they can be reached even quicker on the downside move.

As of writing virtually all of yesterday’s decline has been erased, and share prices are trading around 650 pence a share. One thing remains certain – volatility is here to stay with this particular stock!

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