JD Sports on the Brink of Shareholder Rebellion

JD Sports stock at 2nd highest point in 5 years, but advisors want the CEO out and his pay curtailed.

Being a good sport is all part of corporate leadership, and in the case of one of Britain’s largest high street retail chains, sportsmanship goes beyond the boardroom.

JD Sports Fashion PLC, headquartered in Bury, Greater Manchester, is a household name with retail shops in every high street and every mall across the United Kingdom, and has been publicly listed on the London Stock Exchange since 1996.

The company’s stock prices have been rising steadily until reaching the highest point for 5 years on April 16 this year, and have remained steady since, however today there has been a slight decline by 1.6 points (0.17%) today.

Big deal, you may say…

It may not seem like such a move, and the company’s share price is still at a relatively high position when looking at its performance over a five year period, however there is now a very important factor to bear in mind.

Today, majority shareholders have begun to revolt against what they consider to be inappropriate bonuses that have been granted to JD Sports chairman Peter Cowgill.

Mr Cowgill was paid over £4.3 million in bonuses in the last financial year, which made his total remuneration package up to over £5 million if his salary is also taken into consideration, despite having received a salary cut of 75% for a few months during that accounting period.

Independent provider of global governance services Glass Lewis has advised that major shareholders in JD Sports should vote against the company’s pay policy.

Mr Cowgill was entitled to this gargantuan bonus as a result of a remuneration package that was signed off by the company two years ago for what the firm describes as ‘exceptional past performance’ however the external advisors to shareholders have stated their position in that this should be contested, especially given the massive £86 million in furlough payments JD Sports has received from the government.

What’s more, Glass Lewis has attacked Mr Cowgill indirectly, as it is not just his pay packet the advisory firm disapproves of, but also Mr Cowgill’s suitability as CEO by implying that shareholders should vote him off the board when he is due for re-election in three weeks time.

This is not yet a shareholder rebellion, however that is exactly what is being encouraged, and if it occurs it will be yet another in a long line of such activity that has been virulent over the past few months among top London Stock Exchange listed companies.


Know Your Hashrates From Your Pharmaceuticals? You Can Now Trade Commission Free!

No, not that kind of hash. I refer to the words of technology entrepreneur Jeff McGonegal, who last year said that he wanted to increase the hash rate by purchasing 8,000 new Bitmain S19 Pro Antminers for $17.7 million.

He was, of course, referring to the hashrate, which refers to the number of hashes that a cryptocurrency mining computer can make in each period of time, usually a second.

Mr McGonegal is CEO of Riot Blockchain, which is a NASDAQ-listed cryptocurrency mining entity, based in Castle Rock, Colorado, whose stock price appreciated sharply in 2017 after announcing a pivot from veterinary drugs and medical technology to blockchain.

The intention of the increase in hardware was to bring a total of 9,000 mining machines online by January this year and grow the network at a rate of 2,000 machines until April this year.

It’s been a tumultuous journey for the company’s stock, as remarkable as it is that a Bitcoin mining enterprise is even able to list its stock on a public exchange, and values remained very low until a sudden spike in February this year which took the stock from a paltry $3.40 to a sudden $77 per share, before tailing off to its current value of $28.

This is just one of the interesting range of stock CFDs that ETX Capital is now offering with zero commission.

Today, ETX Capital selected a range of stocks available for trading with zero commission, representing a diverse selection of industry sectors including pharmaceutical giant Moderna, big tech mainstays Amazon and Tesla, and internet giant Alibaba.

The ethos behind providing these stock CFDs on a commission-free basis centers on continual demand among ETX Capital’s loyal client base for stock CFDs, as well as a need to reduce entry barriers experienced by new traders wishing to begin their trading journey on indices. ETX wanted to provide a larger cross section of the trading community with a simpler way to buy and sell these bigger stock CFDs with no minimum charge or commissions.

Due to their lower costs, commission-free trading apps tend to offer less research and investment information to their customers than established platforms, however with ETX Capital, traders can have the best of both worlds, with zero commission on these ten selected stocks, and a number of detailed analytical resources each day, ranging from our own technical analysis from Alex Neale and Michael Baker, and of course my own televised and written research which is published several times per day across a range of channels.

Commission-free stock trading evolved from a market niche dominated by newcomers to a mainstream feature in just a few years, however now the ability to trade popular stocks with an established brokerage with a long-term, loyal client base is very much here.

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.

Authorised and regulated by the Financial Conduct Authority, with Firm Reference Number 124721.

As if the Credit Crunch in 2008 Was Not Enough. Here We Go Again….

Before the credit crunch, which was a sudden reduction in the general availability of loans along with a sudden tightening of the conditions required to obtain a loan from banks in Britain and North America due to what critics had written off as a willy-nilly approach to assessing affordability, it was easy to get any mortgage or loan for, well, pretty much anything.

It was a case of simply saying “yes, I can afford it” and simply dividing the amount of borrowing by three, stroking one’s chin and saying “hmm, yes, that’s my salary” and the lenders simply granted it and away you go with a free house, free furniture and a free £10,000 to spend on lifestyle trappings of choice.

All very well, except that it was not free, and the lack of affordability checks caused the inevitable – defaults on repayments, home repossessions and banks with an insurmountable level of unpaid debts.

The regulators gave a few disapproving shakes of their collective metaphorical heads, introduced a set of underwriting criteria that required proof of earnings, and removed almost all access to high loan-to-value secured loans meaning that mortgage applicants needed to pay a higher percentage of the purchase price of a property from their own money.

A few years of bruised credit ratings and sore banks ensued, and of course the size of the market for high interest, high risk lending was too much to ignore, so an entire new set of sub-prime lenders became established to do the same thing all over again, only this time with even higher interest. It is almost unbelievable that loans with over 1000% interest can be legitimately issued on today’s credit market.

History does indeed repeat itself, and today, one of the sub-prime, high risk lenders is teetering on the brink of bankruptcy.

Amigo Loans, which is the brand name of Amigo Holdings PLC, which is listed on the London Stock Exchange under the ticker symbol LON:AMGO is a company that lends to individuals with poor credit histories and offers personal loans of up to £10,000 with a guarantor.

Despite insisting on a guarantee from a third party with a good credit rating, the loans are unsecured and require no collateral, and Amigo Loans is experiencing a credit crunch of its own, which according to its executives is ‘considering all options, including insolvency.

Amigo fell into trouble last year, after rules concerning affordability checks were changed once again and hundreds of thousands of its customers were suddenly eligible for compensation and a High Court judge has refused to approve a compensation scheme for customers.

Amigo understood that it did not have the £151 million required to pay customers, so it attempted to establish a scheme which would pay those eligible for compensation 10p for every £1 that they were due.

Amigo has also postponed the release of its results for the year to March 2021, which were due around now. It is hoping to publish them before July 29, however as they say, there’s nothing like a news story to get people interested, and rather weirdly, the price of Amigo Holdings stock has rocketed this morning.

In August 2019, Amigo Holdings stock price collapsed and has been in the doldrums ever since, but since the news that the firm is considering insolvency came about, stock is up 12.61% to 8.22p per share by 9.30am this morning from 7.30p per share at 8.00am this morning.

Shares in the company slumped by 12.1%, or 1p, to 7.3p yesterday, and overall have crashed 97% over the last two years.

A city trader today commented “A sad tale for everyone involved, more so vulnerable customers who will be forced down the route of extortionate pay day lenders charging 1000-1500% APR. Amigo charged a little more than credit cards. Market capital and shareholder value has been stripped. The only option is insolvency or a modification to the SOA to factor a larger slice of the profits for a longer period.”

Amigo Loans did meet the criteria for a London Stock Exchange listing, however, and there have been no short sells this morning on its stock as a result of the news.

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.

Authorised and regulated by the Financial Conduct Authority, with Firm Reference Number 124721.

The Death of The EA: Why Trading Robots are No Longer in Vogue

“Never underestimate the power of the human element,” said Ramez Faza Senior, one of the executive Account Managers at global customer satisfaction survey company JD Power & Associates.

When such obvious and basic notions of common sense emanate from one of the world’s most feared and respected consumer data firms, it should be taken at face value. It is on this company’s survey results that many luxury European car manufacturers find themselves languishing at the very bottom, below the cheaper, more mainstream efforts from Japan and Korea.

Embarrassing? yes. Fixable? Certainly.

Poignant to our industry, Rasheed Ogunlaru, Author of Soul Trader said “Until you understand your customers — deeply and genuinely — you cannot truly serve them.”

He is indeed correct.

Thus, it is clear that despite being very much an online, fully computerized ecosystem from the top tier banks that provide liquidity right through to the trading platforms that are so well honed that global markets can be accessed from anyone’s living room almost anywhere in the world and trades executed with millimetric precision, the human aspect is vital.

Just a decade and a half ago, however, many retail FX industry participants, especially those brokers which do not have their own trading infrastructure, made great efforts to accommodate trading robots, known in the FX industry as ‘Expert Advisors’.

These take the form of a software code, which is then connected to a trading platform, executing trades automatically on behalf of the trading account holder, removing the need to master the markets or become a trader.

Many of such Expert Advisors, or EAs as they became known, had no provenance, were developed by individuals who were often affiliate partners of offshore FX firms therefore having an interest in coding in such a way that investors see it as a convenience, yet it gradually loses their money so that the affiliate commission can be paid on a profit/loss basis rather than on a commission basis, and there were very little means of testing or verifying the strategies that they follow.

By 2008, an entire EA marketplace had opened up, even to the point at which FX portfolio managers in South East Asia were connecting multiple accounts to MetaTrader platforms via the MAM system and trading over 90,000 lots per month in small offices in provincial towns, with all trading activity conducted via EAs.

Many retail FX brokers began focusing heavily on the lucrative and high-volume Chinese portfolio management market, in which many FX portfolio managers were bigger than the brokers to whom they sent their flow.

Meanwhile in Japan, the world’s largest retail FX trading market with Japanese FX trading having made up 35% of all retail order flow globally for the last 15 years, nobody uses EAs, every trade is conducted manually, and MetaTrader 4 barely exists.

By comparison, Japan’s self-directed traders steadily trade to profit, there are no large burnouts and even when the government lowered leverage in 2012 to 25%, traders simply put more margin capital into their accounts, saw it as a move toward stability, and traded even more. By 2013, the largest companies in Japan, DMM Securities, GMO and Monex were reporting over $1 trillion in notional volume per month per company, all by self-directed traders using proprietary platforms.

Now, with China off limits, the more self-directed Western markets are a key focus.

Traders who were new to the world of currency markets a decade ago are now astute, knowledgeable and sophisticated, and require continual increases in technology from their brokers.

Whilst they still exist, the popularity of EAs has dwindled, as many astute traders realize that they are often either vehicles for transmitting advertisements as they are free to download, or are coded by opportunists, or even worse, are designed to lose money for the combined benefit of the developer and the offshore unlicensed broker that is paying loss-based commission.

Today, analytics platforms are much more in vogue. These being carefully developed systems which do not execute trades but provide automated actionable content in order that traders can quickly and concisely access valuable market information in order to make informed decisions on what instruments to trade and what is trending in the market.

Many traders have mastered the trading platform, and are therefore no longer dependent on obsolete third party platforms that are simply popular because of the number of EAs that are available to connect to them.

The internet is awash with calls for help from people who have relied on an EA which has led their account to loss and lack the confidence or analytical skills to recover it due to the reliance on an EA which in many cases has been coded by a private individual to whom there is no recourse.

This conflict of interest is also one of the reasons that social trading became a thing of the past to a large extent.

As long ago as 2015, a British wealth management company sent a questionnaire to its clients asking whether they would be prepared to pay for a low cost online automated ‘advice’ service. The answer was a resounding no.

It had been suggested at the time that such a service would cost between £100 and £400 and considered widening its existing non-advised portfolios into a wider advice proposition.

The firm’s CEO of the time stated “People do not want to pay for advice. There is no chance that robo advisors or EAs are going to replace self-directed traders” he said, concluding that robo advice or EAs will not replace execution only platforms.

Back in 2015, A.T. Kearney, a global management consulting firm that focuses on strategic and operational CEO-agenda issues facing businesses, stated that there would be approximately $2.2 trillion under management by robo advisors in 2020, equating to a staggering compound annual growth rate of 68%.

That did not happen, and it is still only $797 billion globally. Robo advisors and EAs are certainly not the flavor of the time that they were 10 years ago.

British traders are loyal to their broker, highly analytical and go to extensive efforts to continually learn the market, and to expand their ability to maximize the use of trading platform features.

Thus, to be able to keep a toehold in the very upper echelons of electronic trading, your broker needs to be able to offer a good quality, in-house supported and developed trading environment and to provide all the right tools and information to empower traders.

Today’s traders are hands-on, and want their broker to be hands-on too.

It is the constant development of user experience and comprehensive access to comprehensive multi-asset global markets via a finely honed environment, supported by knowledgeable and responsive staff that will lead today’s brokerage to sustainability.

We at ETX Capital have a longstanding and secure basis for exactly this, having been in business for over four decades, and having developed, evolved and maintained our own trading environment toward your trading experience.

It is vital that we continue to consider you, the trader, as the focus of our efforts. After all, trading is a human science, just as it is a computer and mathematical science.

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.

Authorized and regulated by the Financial Conduct Authority, with Firm Reference Number 124721.

The Black Stuff and The Green List: Oil Volatility is On Its Way!

Those 55 miles per hour speed limits on the highway in the 1970s were largely down to shortages of supply and were designed to ensure less fuel was used by motorists as a result of war rather than for the purposes of road safety which they were largely perceived as.

Today, very little has changed, despite the substantial investment in renewable energy and alternative methods of generating motive power for everything from central heating to transport, and the value of the sticky black stuff is still inexorably dependent on the utterings of government leaders.

Over the past year, to consider oil to have been a volatile commodity is an understatement, its value having dropped into negative equity around one year ago for the first time in history, and the ensuing lockdowns and travel bans having created lower prices in the Western markets whilst demand in South and South East Asia has remained very high.

Today, crude oil is absolutely under the microscope. Even the OPEC countries are publicly discussing its immediate future, with Ihsan Abdul Jabbar, the Oil Minister of Iraq, OPEC’s second largest producer, noted that oil could probably remain around US$65 a barrel.

Standard data is scheduled for release within the next 24 hours in the United States, in the form of the weekly inventories from the American Petroleum Institute, which will be compared to the unexpected climb last week to 90,000 barrels, however this is a bland, routine spreadsheet exercise.

The matter of real interest is that commercial consumers and distributors will likely be assessing a huge increase in purchasing refined petroleum products such as gasoline for cars, and perhaps more specifically, kerosene for aircraft, meaning that more crude oil will be bought by refineries, as the perpetually locked down European Union and its Trans-Atlantic neighbours on the entire North American continent begin to lift travel restrictions.

A combination of pent-up will to travel after a year of blocked borders and a desperate travel industry wanting to regenerate its lost earnings would result in skies full of aircraft, especially as the summer begins and the lure of cut-price tourism gives those seeking refuge from the four walls of constraint.

Companies such as Wizz Air, easyJet and Ryanair have all been advertising cheap flights recently, and have been targeting members of the public who would look to fly within Europe as soon as the travel ban is lifted. This means lots of reservations and therefore a demand for fuel.

The European Commission put forward a proposal on Monday this week to expand the list of countries whose citizens may visit the European Union for nonessential reasons and its president, Ursula von der Leyen tweeted “Time to revive EU tourism industry & for cross-border friendships to rekindle – safely. We propose to welcome again vaccinated visitors & those from countries with a good health situation.”

The decision to lift further restrictions for tourism and non-essential travel will be up to the member states and the proposal was discussed at length yesterday.

India has been a huge consumer of oil in recent weeks, and despite Iraq’s oil minister’s predictions, there is speculation within India that it may rise to $80 by the summer of this year, substantially higher than Mr Abdul Jabbar’s prediction of $65.

India, the world’s third-largest oil importer, has increased its use so dramatically recently that OPEC+, out of its own necessity, has intervened in the oil market on the supply side of the equation to offset the oil demand.

As of April 6, the EIA saw global oil demand at 97.7 million bpd this year. Compared to Brent prices that were near $65 per barrel in March, the EIA sees not much movement in the price of Brent, estimating $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per barrel in 2022.

The US Energy Information Administration (EIA) has overseen a global oil demand at 97.7 million barrels per day this year as of April 6, the EIA Compared to Brent prices that were near $65 per barrel in March, the EIA sees not much movement in the price of Brent, estimating $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per barrel in 2022, which is a contrasting forecast to what the market analysts and OPEC commentators are expecting!

Such diverging views is a clear sign that volatility is likely to remain for some time yet.

Go figure!

Andrew Saks, Head of Research and Analysis at ETX Capital

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.
Authorised and regulated by the Financial Conduct Authority, with Firm Reference Number 124721.