Football Index: Post Stock Split Analysis
We were recently asked by a new investor on the Football Index what happened to everyone's prices back in July 2016. Looking at price history graphs, it shows every player featuring a cliff face drop in their value.
As anyone using the Index around that time will recall, the reason for this odd sight on the graphs was from a 'stock split'. With prices getting to a point where certain players felt out of reach and wanting to be more appealing to new investors, Football Index split each future into four. This quartered the price along with the buzz dividend which was also quartered in value from 20p to 5p per future.
Around this time, the highest priced players on the Index were Barcelona's Neymar, Real Madrid's Cristiano Ronaldo and Manchester United's Wayne Rooney. They varied in price from around £5.50 up to the £6.67 achieved by Rooney.
At the time, the stock split had the desired effect: Investors scrambled to pick up a few extra futures in those top end players and so prices quickly rose.
Since that time, investors such as ourselves who have been using the Index in both the pre and post-stock split eras, sometimes refer to what a player's price would be in 'old money'. That is, taking their current price and multiplying it by four to compare it to their pre-split price.
In this context, we can take one of the current highest priced players on the Football Index, Spurs and England goalscoring machine Harry Kane. His price sits at £5.44 which would be a staggering £21.76 for a single future under the old structure!
What is most interesting to point out about this, is that Kane's current price is almost exactly that of his price on the day before the stock split. He has even recently matched that peak price of £5.48,which means he is now four times more expensive to buy. Keep in mind, this staggering level of growth has happened in less than 10 months.
And the amazing thing is that Kane is not the only player to have achieved this. The player who was demonstrated in the Tweet to give us the idea for this study, Alexis Sanchez has also quadrupled in value.
Paul Pogba is also in this highly impressive club, whilst Kane's teammate Dele Alli is pushing very close to joining them. Diego Costa has also spent a lengthy period as a quadrupled value player until the recent Chinese transfer rumours resurfaced.
We can also add Antoine Griezmann to this list. Putting aside the rollercoaster ride of his recent price, he not only quadrupled in value, but for a period obliterated that mark rising to a whopping six times his pre-split price!
We also must mention the one and only Zlatan Ibrahimovic. At the time of writing, Ibra is in the midst of uncertainty after his nasty looking knee injury in the game versus Anderlecht. With such a lot of money invested into the King, it's no surprise to see investors panic sell.
However, before until that dreadful moment, Zlatan was riding high at £5.94, eclipsing his pre-split price of £5.72 by some margin.
Zlatan's pain has turned to Marcus Rashford's gain however as investors have quickly switched to swap their money into a player who could well be the next future King of the Index.
Whilst other high priced players have not managed to match this extraordinary growth in value, we can still see players like Rooney reach well over double their split price and at times have been even close to triple.
This extraordinary level of growth in such a short space of time highlights the progress made by Football Index. Not only in attracting new investors, but also increasing the faith shown by those who had already invested.
What is also important to keep in mind here is that whilst prices have continued to rise after the split, the Buzz dividend has remained the same. Whilst previously investors were being treated to what now seems a gigantic 20p per future, we are currently still receiving the same 5p split dividend.
But whilst back in June investors were hesitant to further invest £5 for a 20p dividend return, it now seems perfectly acceptable for the same amount to be spent for 5p.
We think the reason for this is that canny investors can see past the high price and see a bigger picture. For example, if you were to invest say £1000 into savings account or ISA, you would expect to see your money tied up for a minimum of 12 months. For this you would be lucky to then receive an interest rate much more than a couple of percent.
Switch that thought to the Index and instead of looking short term, think the same length of time as in a savings account. Over 12 months that money invested into a regular Buzz winner will see an almost comical percentage return in comparison.
So there we go, a quick look at how impressive the growth of the Football Index has been since the Stock Split and a look at some of those players who have driven things forward. As to whether this growth can and will continue is up for debate, but what is clear is that if a player stands out enough, investors will buy.
How many of the Quadrupled value players do you have in your portfolios and at what price did you manage to get in? Let us know with a comment on YouTube or message on Twitter.