Downbetting stocks

[Lemstaboy]

I have been spreadbetting for many years; sometimes upwards, sometimes downwards. Mainly UK stocks but occasionally US stocks. Most of my best gains have come from downbets - some held for just an hour or two but mostly a few weeks. I trade mostly via IG.com and Spreadex, both of whom I find very good (I also have a few shareholdings, using IG.com as broker). Favourite bets can change from day to day but at present my biggest downbet is Dianomi (DNM) whose HY Results came out in late January last year. Tracsis (TRCS) and Iomart (IOM) have also been profitable downbets in recent weeks (I've cashed in those for the moment but they remain on my Shorts watchlist and will be reopened if falls resume).

 

[Lemstaboy]

Anyone who watched episodes of the TV programme 'The Weakest Link', presented by Anne Robinson from 2000-2012 will know that the key to making money involved shouting "Bank!" at appropriate moments. A failure to do so (hanging on instead for a possible greater gain) could see gains collapse. I find a similar approach important in capturing spreadbet gains. I place 'echelon' bets; a series of smallish bets on a stock (each with a trailing stoploss in place), some of which I will bank from time to time, and sometimes add. Spreadbets are a leveraged device, (typically leveraged 5:1) and as such can swing the wrong way very quickly, so dithering is not a good idea.

 

[Lemstaboy]

Experienced spreadbetters who sensibly go for indices or stocks with a very tight sub-1% buy/sell spread will find it odd (nay, laughable!) that I bother with stocks where the spread is sometimes 2%, 3%, 5% (a whopping 9% for a rolling bet on DNM for example!). I totally understand that viewpoint - and obviously those only work if held for enough days for the price fall to catch up with and exceed the spread. ;-) Recommendations for other continuous fallers I might look at are welcome. EDIT: I mentioned 9% spread for Dianomi; market spread on that is currently 8%, Spreadex's spread is just under 9% (8.932%). Price has been falling at around 20% a month in recent weeks.

 

[Lemstaboy]

Throughout 2024, Etsy (Nasdaq:ETSY) was my most profitable spreadbet (repeatedly downward over several months.) I hold no position there since late October when it came back up through $50 but it remains on my watchlist as an easily traded stock (spread <1%).

 

[Lemstaboy]

Added to my downbet on Vertu (VTU) the car dealership. Price can lurch about a bit but still a downward trend. Down 5% in this first 2 weeks of 2025 and 20% down on a year ago. Iomart (IOM) is another that I followed downwards in the second half of 2024 (no position since but still on watchlist pending any further downturn). EDIT: That's another one where the 8% spread would deter most traders - but it has dropped 50% in a year during which were several slides where the rate it was falling made it worthwhile.

 

[Lemstaboy]

I caught less than half of the Pets At Home (PETS) fall from £3 to £2. I see no obvious reason why it should fall any further (I didn't expect it to drop as far as it did) but it remains on my watchlist, just in case. If it continues recovering I shall delete it at the end of the month. EDIT: Since posting that I've opened another short on PETS. My latest array includes downbets on DNM, PETS, TRCS, VTU.

 

[Lemstaboy]

Tracsis (TRCS) I increased my re-opened downbet today. Having chatted throughout the day with various friends who are more familiar with how the company is responding to the government's establishment of Great British Railways, I think they are in real trouble. The company argues that GBR offers a great opportunity - but the kind of staff GBR are advertising for implies that they will take everything in-house, to the detriment of outsiders such as Tracsis who are obviously going to lose business when each rail franchise ends and will certainly see no upgrades in those existing contracts in the meantime. Their failure to make any headway in the USA has yet to fully register with some investors who are still talking up the company's prospects there (where they are an extremely tiny local minnow). The company has been cutting costs by laying off staff but some quite important individuals have quit, messing up the overall balance of skills in several departments. TRCS has fallen a long way already but I suspect it will sink further - even allowing for the occasional upkick. It is now my biggest downbet. Coincidentally my niece recently took up a job at their Leeds office and, without breaching any confidences, has made a few interesting observations that reinforce my doubts about their prospects.

 

[Lemstaboy]

THG (formerly The Hut Group), which has just hived off its Ingenuity wing (having previously boasted it as their jewel-in-the-crown), is a company whose shares I shorted frequently last autumn, and which has remained on my watchlist while I waited to see how that splitting of the company panned out - is a stock that I shall short again if it looks like dropping through 40p next week. This was around 800p a share 3 years ago since when it has lost 95% of its value and doesn't look like it has any great plan for recovery.

 

[Lemstaboy]

Wynnstay (WYN) is back on my shorting watchlist ..