Public.com is a US-based commission-free trading platform that was co-founded by Jannick Malling, an ex-Saxo and CFH executive.
We recently covered the company because there were rumours that they would be acquiring Dutch stock / CFD broker BUX. That deal is off the table according to a report from Business Insider.
However, the company did announce this week that it would be expanding overseas in 2023, giving people the option to sign up to a waitlist. Strangely they didn’t actually say where they would be launching.
But doing some digging it seems that Public will be trying to launch in the UK at a minimum. The company set up a UK entity at the end of 2021 and appointed Robin Spruell as a director in June of this year. Spruell works in compliance and was previously a director of Binance’s UK entity. Public doesn’t seem to have approval from the FCA yet, so it may be a while before they go live.
Another interesting hire for the UK entity is Dann Bibas, who was previously at Wise and helped build their investment proposition (the one mentioned here last week). Bibbas is also based in the Netherlands. Does this mean Public will be setting up an entity there as well?
As of yet, there seems to be nothing there but it’s plausible that could be the next place they go to. If it is, they would be treading the same path as Webull, who have set up entities in the UK and the Netherlands, presumably in order to launch across Europe as well.
Why expand overseas? My guess is that Public aren’t making much money in the US and that Europe could actually be a bigger win for them. Firstly they can make more on FX fees, although that’s not going to make them massively profitable.
More importantly they can add CFDs to their product set. Given that they were purportedly trying to buy BUX, it wouldn’t be surprising if that’s what ends up happening. If they don’t do this then I don’t get what the point is. Having more FX fees is great but not going to put you on the path to profitability.
Webull hires Trading 212’s ex-compliance head
As we’re talking about Webull, it may be of interest to readers to know that the company’s UK entity appointed Simon Phelps as a director of its UK entity last month.
Phelps was previously head of compliance for Trading 212’s UK entity. As covered in CFDs Weekly before, Webull has appointed Nick Saunders, who spent several years at IG and was formerly Trading 212 UK’s CEO, to lead its initial efforts to expand in Europe.
Is Plus500 getting hit by Odey Asset Management?
One of the arguments I’ve made here before is that Plus500 shares are undervalued. Part of the reason for that, I think, is their crappy PR, as well as sector risk, past corporate hiccups and the behaviour of the founders, who tried very hard to cash out of the business as soon as it was viable.
But another culprit may actually be their biggest shareholder, Odey Asset Management (OAM), a UK hedge fund group. OAM has been invested in Plus500 for a long time. At one point they even owned 20% of its free float. They also (wisely) opposed Teddy Sagi / Playtech’s bid for the group back in 2015 – unlike the company’s founders.
However, one of the features of OAM’s funds that hold Plus500 is a cap on how much one holding can constitute of the fund’s net asset value (NAV). My understanding, and I could be wrong, is that shares in an individual company cannot exceed 10% of NAV in one fund and 15% in another.
What this means in practice is that any time Plus500’s shares increase in value to the extent that they push OAM over their NAV limitations, the fund manager has to go to market and sell off a block of shares. Because they hold so many, it seems plausible this ends up depressing the price, in the same way that Plus500’s regular buybacks may boost it.
It’s hard to say how much this is happening and what impact it’s having, although I’m sure you could work it out somehow. I also don’t think there’s much Plus500 can do to stop it, beyond improving their shareholder register.