Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Sports Direct will drop lower on FTSE100 relegation - sell

By Gary Newman

28 February 2016 11:59

More:

Sports Direct (SPD) has had a very bad few months, during which time it has seen around 40% wiped off of its market valuation.

Already a member? Sign in

• All premium articles

• Tom Winnifrith’s Bearcast

• Access to all the entire nearly 13 year archive

• ShareProphets Daily Newsletter

Cancel any time

This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.

Comments

MrMoto

28 February 2016, 13:07

Blimey is was over £7 when it joined the FTSE 100 in Sept 2013. Looks good value at £3 ish, but will be interesting to see what happens.

Have they sold out already? When you look at the chart in Sept there wan’t much of increase soon after entering.
Alex

29 February 2016, 02:17

It might well drop for technical reasons but I’d be surprised if it stayed there. They’re corporate governance is poor but ultimately they are very capable merchants and I expect the price to recover as we have a few large sporting events in the Summer. I noticed that Odey offloaded the bulk of his stake and then quickly reloaded when the SP got into the 390s. They don’t always get it right, but track record suggests that they do more often than not.
Gary Newman

29 February 2016, 11:52

MrMoto/Alex,
I would view any further dip as a reasonable opportunity to take advantage of, as financially it looks pretty decent.
From what I have seen you do often get a drop though when a company is relegated from the FTSE100 or FTSE250, even if it is just a temporary one (sometimes you see it between the relegation announcement and the actual demotion a few weeks later). I’m not sure if the tracker funds can sell before the review announcement, but a good chance that some other IIs will have already done so.
It’s not one I’d be rushing to short (judging by the disclosures it isn’t a major target for anyone either on that front – from memory one of the funds had a short of around 0.8% i think), but I do think there will be chances to get in lower over the coming month or two, and i also would be tempted to wait for signs of a change in trend if i was looking to buy as the decline has been fairly steep in recent months.