The Share Split is going to dominate March. We can make some educated guesses about what to expect, but the truth is, only Mr Adam Cole at FI Towers knows exactly what is in store.
So, I like to focus on the things I can control and get my own house in order during a period of uncertainty. And, we can lay out some plans for what we will do in the event of certain outcomes from the announcement.
This way, we don’t have to fumble at a moment when we need to act quickly.
I am going to focus on the practical here, for background reading on the Share Split have a look here.
If you are a new member and have not read the 3 month Key strategy article, you should read that first.
We are expecting a 4x Share Split, based on comments from Adam Cole. It could be fewer. It could be by x10. But 4x feels about right.
This on it’s own does not matter all that much. I’m not fussed about how many times shares are split. Amidst all the nonsense people are talking about this player or that player being worth more, or essential for the Share Split, it applies to all players equally.
What really matters is the effect on dividends and this is the first thing I will be looking for when I see the announcement. We can reasonably expect an increase based on comments from Adam Cole. It may be relatively modest, or they could decide to do something bigger since prices have run so far away from dividend yields.
So there will likely be an increase. But it is unlikely to be equal. It could favour performance. It might boost media. It might favour strikers, midfielders or defenders. It might boost In Play, or In Play could be killed off entirely (as mentioned on Twitter this week, it is still technically in a trial and could be removed – I don’t think it likely but the possibility is there).
Essentially, this will not simply be dividing the dividends by x4 and seeing what payouts are spat out. FI area going to be deliberately tweaking things to make the platform more fun and appealing to new traders as they see it.
In my experience, FI cater to goals. People watch football for goals not to count numbers of saves. That’s why FI is already heavily weighted towards goal scoring, attacking play. I don’t expect this approach to change so I would genuinely be stunned if attacking, goal scoring players were disadvantaged by any changes. More than likely, they will benefit.
So let’s think about possible outcomes and then possible reactions.
This is the standard “as expected” scenario. We get a 4x split and a 6-12% bump to dividends in a fairly even way that doesn’t obviously favour one batch of players over another. It’s a likely outcome.
This will not so much cause a price surge in itself but the removal of this uncertainty may unblock a lot of pent up buying. I suspect many people have been holding back until after the Share Split announcement before investing more particularly if they are not confident with the market.
So, in this scenario I expect we would see a positive reaction in the market that should favour on trend players with positive sentiment, whoever is on the site Trendometer at the time and has favourable Summer transfer rumours or other media prospects.
This would be a good outcome for my strategy since I already own many of the likely targets of this type.
I can however see a risk for players who have been bought very heavily because of the Share Split in this scenario. Primarily, very highly priced players that are not expected to have huge media involvement over the Summer. If you look at the prices of premium picks since the end of November (when the first Share Split announcement was made) they have absolutely gunned ahead and much of this has been fuelled by share split hype.
When that reason no longer exists, how many will want to stick around? Particularly if the dividend increase is modest, many of these players will not yield well vs these sky high prices even if dividends are increased by 6-12%. It won’t definitely happen but the risk must be noted.
Reaction/Targets in this scenario: Nothing special, I will simply stick to my plan of strong performance players that match the trend who have transfer rumours. Any spare cash in the balance will likely go into topping up players I already own.
Rabbit from the Hat
With FI seeming to do pretty well, and prices way outstripping yields, it’s not complete madness to think Adam Cole might thrill us with a bigger announcement than expected. A 25% to 50% increase to dividends or even (gulp) doubling them. (Please be sensible Mr Cole and do not bet more than you can afford to lose etc). I think an increase in the 25% range would be quite likely, beyond that… it would be a very big deal.
This will obviously be a huge boost to any players perceived as being strong dividend returners. It will likely reign in some of the hype/speculation picks and bring FI back to prices that are more reflective of actual yields. This would be a good thing.
Assuming the dividends are relatively evenly spread across media/performance and position, first in line for price rises will be the obvious big hitters in the top 10 who will just have money thrown at them immediately. It should however favour those in the top 10 who actually deliver dividends, like your Neymar’s and Pogba’s rather than your long range hope picks like Mbappé (Unless he has a transfer rumour lining up or similar).
However, your mid to high range performance players will not be left out of this, and should also get a bump, again, particularly if they have Summer speculation to back them up as well.
Often, the most expensive end of the market are bought first and then as people realise they are too pricey, people look further and further down the list until eventually a day or so later people are really scraping the barrel in the extreme budget end.
But this scenario is why in my strategy we have solid performance players that ALSO have speculation. If we were holding weak performance players in hope of a Summer transfer, we may struggle to get buyers in the event of a dividend increase if people know they are weak returners.
Reaction/Targets in this scenario: In the event of an unexpectedly large dividend increase, I will probably lump any spare balance into someone like Neymar/Pogba or Messi immediately. I will probably cash that back out as soon as the madness slows down. That aside, I will be already well positioned for this outcome with my existing strategy because all my players are solid performance players with the chance of summer speculation for media.
Here, FI would make a major redistribution to the way dividends were paid out. Maybe they increase performance only and leave media as it is. Maybe they boost media for the Summer.
Maybe they try to boost the relevance of defenders or even goalkeepers. Or have an accompanying change to the scoring system that positively effects a certain style of play (like low baseline Mbappé style forwards).
Maybe In play Dividends are killed off or the payouts are increased to favour certain positions.
Lots of maybes here and that is why it is my least favoured outcome! Although, I do think some small tweaks are quite likely so we must be prepared for it.
And, changes can work in our favour. By favouring attacking goal scorers I am playing into FI’s bias towards exciting attacking play, which increases my odds of benefiting from a change. It is hard to imagine an outcome that scuppers performance friendly, relatively youthful attacking players with summer transfer speculation. But, we never can be sure until we see it.
Reaction/Targets in this scenario: It’s not possible to cover every outcome here as there are so many variables. It may involve some selling if for some reason I now feel my portfolio just became undesirable. This would be painful! But, it would have to be a big and left field change to kill off the players I hold so I think it unlikely.
If a type of player suddenly becomes fashionable we can ID some targets that have the new fashionable trait but we should also do the usual thing of making sure they fit the trends. So, if you told me these types of players just became more likely to win, I’d look for the following:
High Threat Defenders: Guerreiro, Ramos.
High Baseline Defenders: Sandro, Koulibaly, Carvajal,
High Threat Mids: Havertz, Thauvin, T Hazard, James Rodriguez,
High Baseline Mids: Banega, Parejo, Kroos, Brozovic
High Threat Low Baseline Forwards: Piatek, Jovic, Werner, Kane, Firmino, Mané, Salah
High Threat High Baseline Forwards: Fekir, Pepe, Insigne, Brandt, Dybala, Martial, Depay.
All of the above would be classic examples of players who would fly if a change was thought to help them. They strongly fit the trends, mostly have transfer speculation, and the prices are not crazy (apart from the high baseline mids who mainly are just the strongest in their category).
These are just the first names that sprung to mind. You should think of your own – the point here is it is good to have some targets like this in mind so that you do not dither if it comes to a game of fastest finger first. You don’t need to be too clever here, people will go straight for the obvious and then get more discerning later on.
Most of the time FI towers get it right but on occasion, they have been known to snatch defeat from the jaws of victory.
Maybe they come up with a stinker of a rule change. Or decide they could not afford to increase dividends after all. Anything that bursts the confidence in the market. It’s unlikely, but worth being mentally prepared.
Reaction/Targets in this scenario: Unless we are talking doomsday, I will probably not be rushing to the Instant Sell button unless the spread is very soft.
You can only really protect yourself against this outcome now by making sure your portfolio is solid. Once bad news breaks, there are not many great options. This is why in my strategy I am only holding strong performers that I could happily enter next season with if I need to. This is our insurance policy against any short term loss of confidence.
Often, people over react too strongly to bad news and we can *probably* wait this out if we have long term confidence in our holds (unless FI do something serious that really disappoints traders beyond just the usual grumbling.) If you are holding pure hype/speculation holds at very high prices at this point, that is when you really need to be sweating.
We can’t predict everything but we can put ourselves in a strong position.
We should get our own house in order and hold only players that we think can prosper or at least survive under any of the above scenarios.
Whilst I am not holding back and waiting for the split, it is a good idea to free up a small portion of our balance in the coming weeks and have a bit of flexibility to move for players that become fashionable after the announcement.
Having to sell to buy is not ideal, particularly when Instant Sell is likely to be suspended. By the time we have freed up cash, the best targets will have flown in price.
The Share Split is causing a lot of excitement but also nerves, and that will only build from here!
I’m happy to take any questions on this or anything else via the contact button or Twitter if anyone has any. And as soon as I see the announcement I will turn around some quick fire thoughts and post them on the members area as soon as I possibly can.