CMC Markets plc (LON:CMCX) is doing a ‘terrific job and still very overlooked’ says Gervais Williams of Premier Miton, as part of a wide-ranging interview on some of his investments.
DirectorsTalk asked:
Turning to CMC Markets, it’s had a particularly good January 2024 with its share price up 27% following a strong performance in the third quarter of FY24. Now, CMC expects an improvement in net operating income for FY24. How do you see its outlook?
Gervais Williams of Premier Miton commented:
It’s interesting this company is coming down: it was £1.4 billion a few years ago so the underlying operation was generating a lot more cash in the past, that’s partly during the period of 2020 when people were trading more and there was more volatility, they were doing more sales and doing more profit.
Specifically, I think it’s doing not just a good job, I think it’s doing a terrific job with customers. I think you can trade straight-through processing with the market, and that’s very important for their Australian customers. They’ve got a very strong market position in Australia.
They’re going to be offering that now to private investors in the UK. I think it would be quite a good product when it becomes more established but, in the meantime, they’re also able to take advantage of the volatility.
What we’ve seen really in the end of last year, the beginning of this year, is with a huge rise of the ‘magnificent seven’, they are called in the US. They were up 107% according to Bloomberg last year so there’s been real kind of trading in those kind of things and clearly, they take advantage of that.
But the market cap is tiny compared to where it was. As I say, it was £1.4 billion, now a bit over £300 million, and most particularly, it’s actually got £200 million cash as well so really a very, very, overlooked company with volatility being its friend.
Market volatility has been relatively subdued while markets have recovered. We don’t know what happens in the future, there will be periods of volatility in the future, there will be events which catch the global economy out, and this kind of company, a bit like the gold companies, actually thrives at a time when the global economy is not necessarily doing quite so well.
CMC Markets Plc is a United Kingdom-based financial trading company. The Company’s principal business is providing leveraged online retail financial services and providing its clients with the ability to trade contracts for difference (CFD) and financial spread betting on a range of underlying shares, indices, foreign currencies, commodities, and treasuries. It offers an online and mobile trading platform, enabling clients to trade over 10,000 financial instruments. The Company also makes these services available to institutional partners through white label and introducing broker arrangements. The Company operates through four segments: UK and Ireland (UK & IE), Europe, Australia, New Zealand, and Singapore (APAC) and Canada; and Australia. It serves retail and institutional clients through regulated offices and branches in 12 countries, with a presence in the United Kingdom, Australia, Germany, and Singapore.
