A year ago Prabhat Sakya at The Motley Fool wrote the article “3 Growth Companies I’d Buy Now: Globo PLC, Plus500 Ltd And Quindell PLC” (http://is.gd/fNuuGU), in which he stated that “there are a wide range of growth companies which are as cheap as chips”.
On GBO (Globo): “choose your moment well and you can bag a growth company at a value price”. GBO was suspended last week. The administrators do not anticipate that the shareholders will receive any money.
On PLUS (Plus500): “amazing growth … priced like a value investment”. Shares have fallen 31% over 1 year, obviously vastly under-performing the indices. There was a recommended cash acquisition of Plus500 by Playtech. It’s beginning to look like this deal will not happen. On 25.9.2015, PLUS said: ” the recommended cash acquisition of Plus500 by Playtech PLC (“Playtech”) (the “Acquisition”) is taking longer than had originally been anticipated. The statutorily required regulatory assessment of the Acquisition should be completed by the end of November 2015 but Playtech and Plus500 remain hopeful for an October 2015 completion. Further to this announcement, the Company confirms that cancellation of admission of Plus500 Shares to trading on AIM is expected to incur a corresponding delay. The Company will update the market in due course.”
On QPP (Quindell): “I am still convinced that this is one of the buys of the moment.” QPP is actually up 44% over 1 year. Go figure.
You would be down 29% on the year if you bought each of the three companies on equal weightings.
Moral: be wary of growth companies which are “as cheap as chips”. The market is often aware of problems.