Aegis Group Fundamentals
Aegis Group is a successful media and marketing group that operates worldwide. You can see from the chart below that it may not be a good prospect for spread betting at the moment.
Since August the price has been relatively flat, at an elevated level. Prior to that you can see the regular fluctuations that would usually be expected.
Aegis operates in two areas, media communications and market research, with the media portion being about 50% larger than the research. Media is represented by five owned companies, Carat, Isobar, Vizeum, Posterscope, and iProspect. Of these, Carat is the world’s largest independent media company, with over 10,000 employees in more than 80 countries. The other companies have their own specialities, including digital and online services.
The Group can trace its beginnings back to 1966, when Carat was formed in France. This was subsequently taken over by the WRCS Group in 1984, and the name changed to Aegis in 1990.
Now it is time to look at what happened in July 2012 which changed the shape of the price chart. A company called Dentsu, which dominates Japan, the second largest advertising market in the world, found it was not making any strides in trying to penetrate the international advertising market. It offered a cash deal worth £3.2 billion, valuing Aegis at 240p per share which represented about 48% premium over its trading price. The buyout was agreed, so Dentsu now has access to markets outside Japan. The buyout means that the conglomerate is the fifth largest communications group in the world, in terms of revenue.
Aegis Group continues to trade, and it is not clear whether the ultimate goal is to rebrand its companies, or simply continue with Dentsu owning most of the shares (to make the deal work, it needed to buy a minimum of 75% of the shares). Aegis has been performing strongly recently, including landing a $3 billion a year account with GM, the world’s third-largest advertiser.
Aegis Group Rolling Daily: How to Spread Bet on Aegis Group shares?
Despite the buyout by Dentsu, shares in Aegis group continue to be traded, though with little volatility. The current daily rolling quote is 234.51 – 235.69. If you think that the price will go up, you may be tempted to place a spread bet for £12 per point, buying at 235.69.
Suppose that you are correct, and that the price goes up to 243.67 – 244.85. In this case, the closing price for your bet is 243.67, the lower or selling quote. That means you have gained from 235.69 to 243.67, a total of 7.98 points. With a stake of £12 per point, your winnings amount to £95.76.
Of course, the price might go down and you would be faced with having to close your bet for a loss in order to restrict how much you lose. Suppose the price went down to 228.10 – 229.28. Once again your closing price is the lower of the pair, or 228.10. 235.69 minus 228.10 is 7.59 points, which means your bet would have lost £91.08.
You might not want to take time to watch the chart constantly to keep down your losses, in case the price moves in the wrong direction. If so, you could take out a stoploss order at the same time that you place the original bet, and this would require your spread betting provider to close your bet and cut your losses if the price reached a certain losing level that you set.
Perhaps using a stoploss order on this trade you would find that the bet would be closed when the price went down to 230.36 – 231.54, and this would save you some of the loss. The price your bet was opened at was 235.69, and this time it would be closed at 230.36. The difference in points is 5.33. Multiplying by your stake of £12 per point, your losses would be £63.96.
Aegis Group Futures Style Bet
Aegis Group shares are a little different to spread bet on at the moment. Aegis was recently bought out by Dentsu, and since then the shares have not varied much from the takeover price of 240p. It remains to be seen where they will go in the long run. The current futures based price for the far quarter is 235.24 – 238.08. If you think the price will go up, you could place a buy bet at 238.08, staking perhaps £8.50 per point.
As this is a futures bet, there is no charge for any rollovers and you can keep the bet open for many months, right up to the expiration date. However, if you want to close it you can do so at any time. In this example, assume the price goes up to 249.62 – 251.80, and you decide to collect your winnings. Your bet opened at 238.08, and it closes at 249.62. Taking one away from the other, you find that you have gained 11.54 points. 11.54 times £8.50 is £98.09 profit.
In practice it is part of financial trading to have your share of losses, so assume instead that the price fell to 229.56 – 232.12. This time you have lost, and you close your bet to prevent any further losses. Your opening price for your bet was 238.08, and you closed it when the price is quoted at 229.56. That means you lost 8.52 points, which for your chosen stake is £72.42.
You might have decided to set a stoploss order on this bet when you opened it, as this would save you having to keep an eye on the market all the time. Your spread betting provider will close the bet for you if it reaches a certain amount of loss that you set. Perhaps with a stoploss order your bet would have closed when the price fell to 231.10 – 233.92. You lost 238.08 minus 231.10 points, which is 6.98 points, and that would cost you £59.33.