Exclusive: BlackRock sells position in Plus500 to below 5%
FNG Exclusive… FNG has learned that New York based money management giant BlackRock has pared its holdings in CFD broker Plus500 to below 5%.
That marked a shift for BlackRock, the world’s largest asset manager with more than $6.8 trillion under management. BlackRock picked up an approximate 7% stake in Plus500 back in mid 2018, and has since remained at above a 5% holding in the company.
Regulatory filings indicate that BlackRock is now under the 5% LSE reporting threshold, but the filings do not indicate by how much. However our sources have informed us that the company has been steadily selling its holdings in Plus500, and may be looking to unload its whole position – BlackRock usually doesn’t typically take on small positions in companies. A 5% stake in Plus500 is worth about £80 million, or USD $102 million.
It looks as if BlackRock has been taking advantage of the steady diet of buying in Plus500 shares in the market, thanks (at least in part) to the share buyback program at Plus500 which has seen the company repurchase more than $10 million in stock since mid August. The company plans to get to $67 million in buybacks by February 2021, as part of management’s plan to distribute profits to shareholders.
BlackRock bought into Plus500 at right around the same price level the company’s shares sit at today, in the £15 range. Since buying in BlackRock had seen its investment in Plus500 fall by more than 50%, after low market volatility in early to mid 2019 took its toll – alongside a regulatory leverage limit of 30x imposed by the FCA and regulators across Europe. Plus500 revenues and profits fell, as did its share price, down to the £5-7 range for most of 2019.
However Plus500 has seen a rebirth of trading activity and record new client sign-ups throughout most of 2020, leading to record revenues and profits for Plus500 in the first half of this year. And it has shown in the company’s share price, trading back up to the £15 range.
Which is to say, it looks like BlackRock feels content (and probably fortunate) to be basically breaking even on its investment in Plus500, when at one point it looked to be a big loser for BlackRock. It is also plausible that BlackRock believes that the current high level of trading activity (and resulting profitability) being enjoyed by Plus500 and a number of the other leading global Retail FX and CFD brokers might not last forever.