OW seems to be very astute with his - quite small - interventions into the market. The last one was when the SP had slipped into the 150s. He bought 32k at 155p, a mere £50k. The response was I think a 10p uplift in SP. So cost to OW was £50k; increase in paper value to him of £3k on that purchase; increase in paper value of his shareholding of 4.2m shares of £420k. Net increase in value to him - equating paper and actual investment at the same values which is not necessarily fair - around £420k, which really is a pretty good return on his £50k outlay!
"I read an article in today's Times (sorry, I don't have a link - or a copy in front of me for a direct quote) and from memory the estimate of the currently black market is $2.1bn ..."
I've seen $150 billion, the same as Gretel said. I can add that the estimate is from the American Gambling Association, whoever they are. midcapper, your memory's like mine!
I can confirm that the outcome depends on what states choose to do, at least that's what I've heard. I've heard that states can rule that part of a sports bet has to go to the teams involved, and states will tax the bets, which is their motivation for making sports betting legal. But that's just from memory.
There's still a long way to go with this encouraging announcement. Each State sets its own rules or restrictions on gambling: some may limit sports betting to "venue only", others may have a broader acceptance in casinos as well. The permission in some states may be extended to online or via Apps. All of which will become clearer in the fullness of time; however, some States are further ahead than others with their licensing plans.
I read an article in today's Times (sorry, I don't have a link - or a copy in front of me for a direct quote) and from memory the estimate of the currently black market is $2.1bn, with a forecast that it will reach $2.7bn. Personally, I think that could be an underestimate.
Nonetheless, the impact for XLM's business will hinge on how much of the betting market is extended to online activities - and as mentioned, this will take time to evolve. But seriously exciting potential for our firm.
A real positive - and it looks like the SP is moving to the up again. If I recall correctly it was some 2 years ago that there was some conjecture on this BB and others as to how significant a benefit it would be if only one state legalised O/L gambling, let alone the whole lot being able to do so. The implications for revenue gain and share for XLM must be significant - at least as big as a very large acquisition or two. We have yet to see this reflected in the SP and it will take time for OW and the analysts to calculate what they will be, but upgrades to forecasts for the next FY, if not this, should be material.
This RNS out earlier today from GAN confirms that online sports betting is now happening for this coming H2'18:
"The Company confirms it is preparing to launch Internet sports betting in both New Jersey and Pennsylvania for its clients in H2.
Sports betting will be delivered as an integrated extension into GAN's enterprise software platform and GAN will participate in the material incremental sports betting revenues. These incremental revenues are expected to be material for GAN in H2.
Dermot Smurfit, CEO of GAN commented:
"GAN has been preparing for sports betting since Q4 2017 at the request of multiple US Clients who asked GAN to review, procure and support the delivery of sports betting solutions both online and for deployment in the retail channel in the event PASPA was overturned. We welcome yesterday's repeal of PASPA and confirm that sports betting will be material to GAN's revenues going forwards, commencing in the second half of 2018."
"Greg Johnson, analyst at Shore Capital, said there was a 'significant land grab opportunity' for UK-listed bookmakers.
'Around 20 states including New Jersey, Pennsylvania, New York and Mississippi, have passed bills or have them making their way through the state legislature, to legalise sports betting; with New Jersey likely to go live in a matter of weeks,' he said.
'With some $150 billion (£110 billion) estimated to be wagered annually across the US already there is clearly a significant pie to share.'"
"Supreme Court strikes down federal law prohibiting sports gambling
3:19 PM BST
WASHINGTON -- The Supreme Court has struck down a federal law that bars gambling on football, basketball, baseball and other sports in most states, giving states the go-ahead to legalize betting on sports.
The Supreme Court on Monday struck down the Professional and Amateur Sports Protection Act (PAPSA). The 1992 law barred state-authorized sports gambling with some exceptions. It made Nevada the only state where a person could wager on the results of a single game.
One research firm estimated before the ruling that if the Supreme Court were to strike down the law, 32 states would likely offer sports betting within five years.
The court's decision came in a case from New Jersey, which has fought for years to legalize gambling on sports at casinos and racetracks in the state.
XLM are in their portfolio of the ten "companies with the highest historic dividend yields" on AIM.
On pages 53-54 there's a VERY positive profile of XLM, which concludes:
XLMedia looks to be a great growth business with a superb track record of rising profits and plenty of cash in the bank to invest in further organic and
At the current price of 178.5p the company is valued at £393 million and trades on a historic earnings multiple of 13 times. That's looks good value given the historic growth rates, cash in the bank and expected growth in 2018 from the variety of recently completed deals.
The historic yield is a reasonable 3.2%, with analysts at Berenberg Bank having a
target price of 290p for the shares, suggesting 62% upside."
Good to see these guys get involved and start organising PIs ....
ShareSoc demands fair treatment for Beaufort clients
The liquidation of Beaufort Securities on the FCA's instruction is targeting the ring-fenced property of thousands of UK private investors, many of whom are now facing losses of up to 40% of the value of their holdings. The liquidator's proposals bring into question the whole system of regulatory and legal protection of investors in the UK.
The Financial Conduct Authority (FCA) declared Beaufort Securities Limited (BSL) and sister company Beaufort Asset Clearing Services Limited (BACSL) insolvent on the 2nd March 2018 and PwC were appointed as administrators of BSL and special administrators of BACSL.
On 15th March, PwC confirmed that the ringfenced property of the Group's clients was held appropriately in accordance with FCA requirements, being approximately £50million in segregated client money accounts and around £850million in client owned securities.
On the 12th April, PwC noted that client money and client assets were, as at the date of administration, substantially complete save for a very small number of isolated deficiencies. However, the initial estimate of £850 million client assets was reduced to £500m as a result of illiquid / nil value positions. The special administrator stated that the majority of client asset returns will commence September 2018 at the earliest and that around 700 clients with assets valued over £150,000 may experience a loss up-to a maximum of 40% on their ring-fenced assets!
PwC is proposing to charge an incredible £100 million for the wind-down over a period of 4 years. They have provided no justification of either the amount or timeframe for the simple task of transferring an electronic registry of client assets/money to one or more replacement brokers.
Over 14,000 clients invested through Beaufort Securities, an FCA regulated entity, on the assurance that their assets were firewalled per FCA rules precisely to protect them in the event of the broker's insolvency. The suggestion that PWC as Special Administrator can seize client property and treat the owners as creditors of the failed entity makes a mockery of regulatory protections for investors in the UK.
The FCA seems to have allowed Beaufort Securities to continue trading while the FBI carried out an undercover investigation, apparently putting the interests of the FBI ahead of those of UK investors. This calls into serious doubt the FCA's priorities and the regulator's role in protecting domestic savers.
ShareSoc is determined to defend the interest of Beaufort clients, and the interests of UK shareholders in general, whose shares are held in nominee accounts and are therefore similarly exposed to the insolvency of their brokers.
ShareSoc has launched a campaign with the primary purposes of mounting a legal challenge to the current administration proposals, specifically:
Refuting the Special Administrator's right to seize ringfenced client property
Ensuring proper separation of the liabilities of BSL from those of BACSL
Questioning the Special Administrator's cost and time estimates in relation to the wind-down of BACSL
Seeking a transfer of the business of BACSL to an alternative custodian
Reviewing the actions and motivations of the FCA in this matter
Lobbying for legislative change to ensure that assets in custody are properly protected
Renowned FT writer and private investor, John Lee says:
"I am very happy to endorse the thrust of ShareSoc's campaign. We were all shocked to discover the seeming vulnerability of clients' funds when we thought that they were ring-fenced and protected. This loophole surely has to be closed".
Details of the campaign can be found here:
ShareSoc Director [email protected]
(t) 01582 526174| (m) 07989 643119
That is Lord John Lee - a very astute investor. The upside compensation of 17000 clients at £50k a go is some £850M. I cannot see this sum being paid, but whatever figure the FSCS has to pay out it will be a real whack to the taxpayer. Lunacy prevails at the FCA - the taxpayer funded hovel of financial improvidence.
Heard about this at a meeting on Friday at Mello. I agree with you that it is outrageous that this sort of thing can go throuhg on the nod so to speak. At the meeting I attended there was a member of the House of Lords and he was putting down an urgent motion in the House to discuss just this. The Commons should be equally incensed if not more so, and the Treasury should be playing an active role, since the FCA seemingly are not.
Not sure if many are aware of the ongoing saga on the administration of Beaufort, but if not then this may be of more than passing interest. For the avoidance of doubt I have no holdings with Beaufort. I believe what is going on affects just anyone who holds stocks in nominee accounts and the implications for the outcome of this could be profound. Never did I believe that ring-fenced share and cash accounts were not secure. My enquiries of professionals in the City show that most of them were unaware that the loopholes now being exploited by PWC existed.
The tone of the letters from PWC are dictatorial and very much as if the power of the administrator is absolute. There is not a hint of contrition nor question as to their perceived right to take cash and shares that never belonged to the two Beaufort companies they are winding up.
Surely, the FCA or the administrators should have immediately appointed another broker to take over the client accounts? They admit these are more or less complete and untouched. A number of companies expressed interest in doing just this. Quite why client portfolios are not in the care of another broker is unfathomable - other than it is clear that PWC, with the seeming complicity of the FCA, had decided on where they intended to get their staggering fees (upto £100M is mooted by them) from: the supposedly segregated client accounts.
PWC have stated that anyone with a holding of more than £150,000 in cash and shares will probably have some of their assets (upto 40%) taken to pay for administrators fees and other costs. This would not be the case if the administrators were dealing with nearly all other kinds of companies. They would not be able to unilaterally raid the segregated assets of the innocent.
Not only will Beaufort clients suffer - so too will the taxpayer. The FSCS will pay up to £50,000 to compensate or partially compensate most clients. There are some 17,000 of them. This is a huge, unnecessary bill for the taxpayer to pick up and is the result of ineptitude by the FCA from the outset. It represents staggering waste.
The administrators propose appointing a committee of clients and have called a meeting to discuss this and other matters on May 10th. It should be an interesting session. Creditors and clients at the meeting may well reject the administrators proposals to take money and shares from clients accounts. Then PWC will have to go to court. This would delay proceedings further. Innocent clients will then have to wait even longer than the given date of September as the earliest month when they might be able to have what is rightfully theirs back under their control.
The administrators must not be allowed to have their way. Segregation of assets is fundamental to the security, wellbeing and working of the private investor community and ultimately a significant part of the City and economy. To not respect it in the full and absolute raises issues with very wide and negative ramifications. Clients unwittingly placed faith in Beaufort and if this raid of value takes place then all trust from the private investor community in the sanctity of holding their investments in nominee accounts will be trashed - as possibly will be some of the utility of CREST. If the administrators get their way then for security reasons investors would be better off demanding paper certificates and holding these themselves as a number already are.
The reputation of the FCA is deservedly low. To have a body of such ineptitude playing a key role in an economy so dependent on the financial sector is a travesty. Should you feel strongly on this I urge you to write to your MP and please disseminate the issue wider.
Anyone seen the dividend yet? Last time round was a real fiasco - and no matter the reason or fault does not reflect well on governance at XLM. Hopefully, no repeat this time round, but today is 20 April, the declared pay date, and nothing seen by me yet. And this hardly ranks as a complex issue.
In 2017, investors began to overlook their concerns with XLMedias (XLM) Israeli heritage and its exposure to the loosely regulated gambling industry. Still, an enterprise value to adjusted cash profits valuation of 6.4 times looks stingy considering the groups pace of growth. In 2018, revenues are forecast to rise 11 per cent even without accounting for the expected acquisitions in the cyber security and financial services space.
Once XL emerges from its period of investment, there is great potential for profit growth to outpace that of revenue as more of its websites start to turn a profit. In 2017, only 10 per cent of the 2,300-strong portfolio was profitable. Not that the groups current profitability is anything to complain about: operating margins in the publishing business currently stand at 80 per cent and theyre improving in the media business where the group drives traffic to its partners websites as XL increases its focus on quality customers. Buy."
on 17 April 2018, Ory Weihs, Chief Executive Officer, purchased a total of 32,258 Ordinary Shares at a price of 155.0 pence per share. Following this purchase, Mr Weihs now has a total beneficial interest in 4,215,187 Ordinary Shares, representing 1.91% of the current issued share capital of the Company.
Share price: 154.5p (-2%)
No. of shares: 220 million
Market cap: £340 million
Acquisition of leading UK Bingo comparison site
A reader in the comments has already done a bit of digging into this, and found the published 2016 accounts for Whichbingo Limited, owner of whichbingo.co.uk.
Background: XL Media is the Israeli "performance marketing" group which we have occasionally covered in this report. Using its own content management system, it manages a wide range of websites and funnels its readers to gambling and credit card companies, sharing in the revenue they go on to generate for XLM's marketing clients.
Today's announcement says that XL Media has bought the whichbingo.co.uk website. We can make a distinction between buying the website and buying the company. XL Media has not said that it bought the company.
For what it's worth, the company reported £1.47 million in its balance sheet P&L account for 2016, up from £0.87 million the previous year. We don't have 2017 accounts and we don't have an income statement. Thanks to bestace for figuring this out.
Whatever the merits of the deal, it's almost certainly going to be a very small piece in the puzzle given the £340 million market cap attached to XLM.
As has been pointed out in the comments, today's deal was announced via RNS Reach. For anyone unfamiliar with this, RNS Reach announcements are "non-regulatory", which for our purposes means approximately the same thing as immaterial. It's for voluntary announcements by companies:
RNS Reach is a high-profile investor communication service aimed at assisting listed and unlisted companies to distribute non-regulatory news releases such as marketing messages, corporate and product information into the public domain.
So in summary - the strategic rationale for buying "whichbingo" is clear enough, but the deal is probably not material in relation to XLM as a whole.
XL Media - Review
Last September, I said that XLM was probably a fine opportunity, with the shares priced a tad below 140p.
Since then, they flew up to 220p before returning to their current level.
Operating income announced last month was up by 33%, and the Board printed an optimistic outlook, guiding for "the continued execution of our strategy".
I expect that the share price will be supported soon, if it heads much deeper into value territory:
Nervous investors such as myself will stay on the sidelines, due to caution around the type of stock this is (a gambling/online AIM stock based outside of Europe), though I also note the presence of high-quality institutions on the shareholder register. But still, given the type of stock that it is, the valuation multiples could struggle until it is bought out by or merges with a more familiar name, or lists on a more trusting stock exchange (unlikely, given that UK institutions have bought into it).
It's uncomfortable when you see a successful growth stock trading at a nice valuation, but it just doesn't fit into your risk profile. I'm know I'm probably missing out. That's how I feel about XLM.
Yes Gretel. Two buyers among the institutions which will I hope get us out of this SP decline spiral which does not reflect the value in the company. After all, very recently money raised at 398p; future share awards to staff based on min 302p.
About sports betting in the USA, I've read a few articles and most authors or people they quote think legalization is more likely than not, though it might be left to each state to decide. There are reports about most of the justices being receptive to legalization during oral arguments. It's mentioned in a recent Washington Post piece. If the long URL
doesn't work, try googling "Awaiting Supreme Court decision, pro sports leagues prepare for legal betting".
There are various estimates of how big illegal betting is, the Washington Post says it's over $100 billion. Obviously that's all unregulated and untaxed. I expect it's too hard to reduce the illegal betting to a much smaller amount, but I don't actually know. One possible problem, hopefully just in my imagination, is that the huge jackpot for betting businesses has attracted a lot of firms to prepare to grab a slice of the pie. I'm hoping there hasn't been enough time for anyone outside the industry to set up a platform, or for too many non-US operators to get a foothold in the US. The Washington Post expects a ruling "before July".
Apart from reading a few pieces about the Supreme Court case, I know very little about sports betting in the US.
Thanks Gretel. it was a first class presentation - the more one sees Ory, the more credible he appears. He also places high value on engaging regularly with the PI community which is great. Very much in control in a market he has deep knowledge of. Paul Scott described him as " an intelligent fanatic as defined by the expert small-cap growth investor Ian Cassel. He has had important colleagues, for sure, but it has primarily been his vision which has created this company out of nothing and which is guiding it toward the future." Lavi is clearly very competent, but I'm not sure the rest of the board are anywhere near as strong. This might lead to some reluctance to engage for other potential investors.
The guy from MoneySupermarket struck me as being very astute. His comments and endorsement provided a refreshingly different angle on things relative to those one hears from the usual suspects there.
Current SP weakness is puzzling, the more one sees the XLM deliver the more confident I am to continue holding. That said the PEG of 2.64 on Stockopedia is high, but it cannot be long before forecasts for the current year are revised up. The stock rank there has also fallen from a very strong 90 plus a few weeks back to 75, chiefly because of the negative momentum in the that same period so I don't hold too much store by this.
I went to a post-results presentation at Berenberg's offices and came away extremely impressed and encouraged.
Ory and Inbal Lavi presented. Most of what was said was as per the web cast and in the results. There was certainly a stress on "aggressive" growth targets, and on the potential for both organic and acquisition-driven growth.
Even in the "home" Scandinavian markets XLM still have a relatively small share of their markets, and XLM are confident of growing this.
They didn't want to go overboard on the potential in the USA. However, there are a number of reasons for optimism:
- the potential lifting of restrictions on sports betting in the USA after the upcoming court case
- the recent allowance of online gambling etc in Pennsylvania, which could spur further relaxation in other states. Pennsylvania should begin generating such revenues in H2'18
- money comparison web sites and take-up in the USA are well behind those in the UK and elsewhere. XLM are hopeful from feedback and performance to date that Greedyrates, moneyunder30 etc will grab a large slice of this market
The rewards from some or all of the above could be transformational imho.
Finally, there was an interesting interlude when a question was asked by someone who stated he was (1) one of the founders of Moneysupermarket.com and (2) a large shareholder in XLM. He noted he'd buy a lot more if XLM wasn't so illiquid! Given the consistently large volumes I'm really not sure about that.
Anyway, he stated XLM was a "beautiful" business given the large recurring income arising from the book of referred customers from whom XLM gain a lifetime revenue share from the gambling companies.
He believed that XLM should make more of this. He believed the City wasn't currently aware that XLM had such a significant bedrock of recurring income - and Inbal agreed that in theory they could turn out the lights, shut down everything else and have a highly profitable business sitting and collecting these revenues.
If the market was aware of all this then XLM would trade at a multiple significantly higher than currently.
This is probably true imo. Hopefully the process of re-assessing XLM has already begun given the successful January placing at 198p. Why the share price has slid to 182p - almost 10% below the placing price - is beyond my ken apart from there being a specific seller or two who need the cash. Perhaps they need profits to balance out losses in CVR/GNC/all the other companies who've recently warned!
Any further acquisition news should get things going nicely.
"I dont want to make too much of their reco for Conviviality last week ..."
The Conviv blunder was signed "HR". Can anyone say if the Tip Update had a named or initialed author?
XLM is in the "COMPANY RESULTS" section of the latest IC, with a "Buy" rec. Under the more factual stuff, there's a positive paragraph of comment, signed "MB". Paraphrasing and summarizing, the valuation is low considering the opportunities for growth.
That said, though, I don't think the opinions in IC matter all that much. Anyone can read the results and check valuation metrics.
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