George Soros is a famous billionaire and investor. His investment activity is viewed by many traders, investors and analysts as an indicator of new trends and tendencies. Others simply copy his trades.
Not so long ago Mr. Soros surprised the investment world by becoming a major shareholder of Manchester United several days after Manchester United’s IPO on NYSE, which took place on August 10th 2012.
What is so surprising about this deal and is MU’s stock a bargain? Let Eugene Olkhovsky, ’s leading expert, answer these questions.
MU’s IPO
The Glazers , the owners of Manchester United, were intended to sell 10% of the stock at $16 per share or higher. However, the real price went down to $14 per share. Thanks to the deal the owner of the famous football club attracted some $233 million, which is expected to cover some of the club’s debts. Anyway, this is the biggest IPO in contemporary sport.
The chart below, courtesy of , reflects the current state of affairs in the market of MANU:
Soros Fund Management is reported to have purchased 3.1 million shares or 7.85%. Therefore, George Soros’s spend around 25 of its entire capital on MU’s stock.
At this point, we can conclude that the IPO became the beginning of the downtrend we can see now (the chart above confirms that).
Some experts assume that MU’s stock started depreciating after the news that the football club purchased Robin Van Persie, a 29-year-old Dutch striker. The deal wasn’t a bargain they say. The striker will earn 235K pounds a week. For reference, MU’s debt exceeds $660 million.
Investing In Manchester United Looks Questionable
According to Eugene Olkhovsky, MU shareholders’ investment prospects look rather pessimistic if to consider the football club’s debts.
The UK has recently seen some precedents: Glasgo Rangers went bankrupt. Two years ago Portsmouth was on the verge of bankruptcy. Moreover, Man U fans keep blaming the Glazers for “robbing” their football club of money through some shady payments to companies indirectly connected or directly owned by the Glazers.
Therefore, experts assume that Manchester United’s stock is a rather risky asset. It is still unclear when the price reaches the bottom. Moreover, it is still unclear what factor can support the price. Theoretically, the following factors may become bullish drivers:
A major contract with General Motors (if it is signed) is expected to replenish the club’s budget by $30 million a year starting from the 2014/2015 season.
If MU shows strong and successful play in Champions League, it may earn over $10 million. However, the money is not enough to cover MU’s huge expenses. Obviously, this fact cannot reassure investors.
