Posts Tagged stock market
Betfair results due out tomorrow
Posted by Peter Webb in Betfair, News on December 13th, 2011
If you can get up early tomorrow morning you will be able to see Betfair’s H1-12 results. The first since the introduction of the most recent premium charge announcement and various other factors. It will be interesting to see what impact all the news coming out of Hammersmith this year has had on the underlying business. It feels to me like growth has slowed, but that they will be able to boost the bottom line thanks to their very aggressive implementation of price increases.
But let’s not pre-judge things, I’ll be up early to see the news. I’m on the RNS service so I will get the results the instant they are announced and I’ll post them up for everybody. If you are interesting in tuning into the formal announcement webcast you can register on their investor relations web site: -
http://corporate.betfair.com/investor-relations.aspx
Half price sale underway
Posted by Peter Webb in Bet Angel on May 27th, 2011
When Betfair floated I got some stick for saying they were overvalued and they were not a buy. This wasn’t a statement on Betfair’s business or business model, more the price it was selling at.
I first started taking an interest in the stock market in the mid 80′s and five or so years later I started investing. One thing I learnt is that if a company IPO’s and sells some of it’s stock it will do so at the highest possible price. This usually represents poor value for people buying immediately after the IPO. In Betfair’s case there was selling pressure as well as employee share options, that people had held for a very long period of time, suddenly could be cashed in. This behaviour was self re-inforcing, because if the price fell people were more likely to find a way to hedge their hard earned paper profits. If the price had risen sharply then that selling pressure wouldn’t have existed.
Of course the market can overshoot in both directions so as the price falls, just like a loaf of bread in the supermarket, as the price gets lower it gets better value. Eventually the selling will stop and it will find it’s true floor. But for now you can pick up the worlds largest betting exchange at half price. Is it value? I’ll have to run the numbers again to answer that question, but it’s much better value than it was post flotation for sure. I will be interested to see the next set of results.
Betfair 1/3 for float failure
Posted by Peter Webb in Bet Angel on September 27th, 2010
Credit to the forum poster who found this on the Internet but it’s either a wonderful peice of PR or people are actually betting against the float being a success. An interesting read anyhow. Until I see the price and / or the offer document it’s difficult to make a true judgement as to whether it’s too expensive or not.
A lot of hot air or will a good float?
Are sports markets like financial markets?
Posted by Peter Webb in Bet Angel on February 10th, 2010
Yes and no. There are some similarities, most certainly in a number of aspects. Forex markets are pretty similar in their appearance. But when it comes to trading certain types of markets, there are many differences.
When I first looked at the markets I thought there may be some commonalities, but I discovered that a number of popular technical indicators in financial markets just don’t wash as well in sports markets. Looking closer, there are some clear underlying reasons for this.
Sports markets are very reliant on underlying activity, there is a definite cause and effect on odds. While sentiment can drive prices higher or lower, too high or too low creates an arbitrage opportunity for anybody who has studied or analysed the markets well enough. Sentiment can only go so far in pushing the prices around before arbitrage against well established models limit certain types of price movement. One of the biggest differences though, is that in a betting market all prices are directly related. The same can’t be said of the financial markets which rise or fall based upon their mood that day. Ice cream sellers and umbrella manufacturers can rise and fall together in the short term even if the weather is sunny, on sports markets that’s impossible.
All prices are related on a sports market so you can’t get a permanently rising price without something adjusting elsewhere. No technical indicator will tell you that a horse has bolted to the start, is refusing to load or is being gambled. Using technical indicators in-play is a complete nonsense as in-play odds are determined by the underlying event and the time left to finish. What would I recommend? Lots of things, but keeping an eye on general market activity is one of the most useful indicators. Keeping an eye on non techincal indicators is a definite advantage, staring at some complex indicator that is designed for a different market and can’t possibly work on a sport, not so helpful.
This is one of the reason we introduced the market overview screen. It allows you to see market wide activity at a glance and quickly spot anything that could be having an effect on your current position. Something that’s critically important given the characteristics of a modern sports market.
Stock market vs. Sports market
Posted by Peter Webb in Bet Angel on February 18th, 2009
As many of you know I have a deep background in financial markets and it was this, and a lifelong interest in gambling markets, that brought me to betting exchanges. I thought you may be interested in why I am still active on both the betting and the stock exchanges and the differences I see between them.
At face value, the two markets are not too dissimilar. You can bet on value or price direction on both and betting on both has been around for some time. One issue you have in the stock market though is the high level of transaction costs. If you scratch a trade on the stock market you don’t exit at zero, you exit for zero less costs, these stack up pretty quickly. Also, prices in financial markets can fall and rise at the same time, but in a betting market that’s impossible. IMHO It’s much easier to frame a betting market. One aspect of financial markets is that you can leverage your positions; nobody would let you do this in a sports market for sure!
Some big positives for the sports exchanges is that you get the markets lining up in nice parcels. No need to have the phone on 24.7 to trade them. Just nip in and out when you wish. You also have events that can easily be modelled and managed. No government, war or economic stimulus package will affect the price of the 18:20 at Kempton. Well it shouldn’t at least. Also, they are perfect for smaller bank sizes. I can perform miracles with, say, £1,000 but less so with £1m!! From a return on capital perspective I haven’t seen a market so suitable for turning large pecentages on small bank sizes. The opposite tends to be true in financial markets.
Returning high %’s on small amounts is great, but you can’t do this for long before you run into the other issue, managing larger sums of money. I keep trying to find innovative ways to increase the amount of money I put through sports exchanges but I don’t have to innovate to do that on the stock market.
The big difference for me between the two is that I am not a short term trader on the stock market; I am a good old fashioned investor.
Why am I an investor and not a trader on the stock market?
You and I can sell each other bits of a company on the stock market and if I am smarter than you I will gain what you lose, but ultimately a company is only worth what it throws off in cash over time. No matter how much you and I buy and sell that to each other the value of company stock can only be created on the basis of what the underlying business earns. From an investors perspective the most tangible manifestation of this is dividends. Imagine a trading position where you benefit not only from a price rise but also by getting paid for holding it! This is a good reason to invest long term. You also get the benefit of not needing to be at my screen 24/7. I don’t worry that much about what happens in the next few minutes, days or months. I only look to buy companies that have a decent yield and one that will be stable over time. By focusing on yield you often get the double effect of earning higher dividends and seeing the price rise in response.
In a nutshell that’s how I put my longer term money to use. It also gives me the freedom to mix and match my responsibilities with ease. Most of my time on the stock market is spent reading, researching or speaking to people. You can do that anywhere at your own leisure, it helps if you are interested in it. I actually do very little buying or selling, the complete opposite of what you may expect and nothing like those ‘million dollar traders’ that are the typical stereotype of a modern participant on the stock market. More than one way to skin a cat as they say.
For your interest I have linked to an article I wrote about dividends a few years ago for Shares magazine.
http://www.betangel.com/downloads/060209-Shares-Vol%208-Issue%2006-P45.pdf