Turbulence in the market, whilst worrying at the time, often shakes out some good value. As panic takes a grip, people can sell assets too cheaply.
Whilst the spreads lockdown has prevented widespread panic, we have seen significant drops in many players that were previously looking very on trend and very popular.
But it’s not just prices that have changed. The football calendar falling apart and then being pieced back together will hugely shift the trends.
It’s not just about buying the players who were good before and are a bit cheaper now.
Our current best case and (I think) most likely scenario is that this season resumes behind closed doors at some point between May to June. Then after a short break next season begins even if it starts later than August.
Assuming that is the case, we have two things to do to succeed in the coming months:
1) Judge correctly which players will be most in demand based on the trends/events ahead with the best value prices and;
2) Judge the correct moment when we can start being greedy rather than cautious.
This series of Value Hunting articles will deal with point 1 – finding good value players that match the trends ahead.
Point 2, knowing when we can sensibly be greedy, will continue to be covered in State of the Market.
Right now, I’m still in cautious mode as I think we need more details about exactly how football authorities plan to make games more viable before diving in too hard.
But, we need a good selection of targets ready in case we need to move fast later. And there may even be some players that are such good value they can be worth picking up now.
I have divided up players into these main categories:
– Big Media Premiums
– Core “full season fit” Key Strategy selections
– Currently off trend elite veterans
– Young long term prospects
– IPD players
I’ll cover these throughout the week.
Today, I am going to focus on Big Media because I am expecting tomorrow’s announcement from FI to be media heavy.
I actually find writing about these big premiums a bit dry BUT I think they are worth covering now because depending on what happens tomorrow with the FI announcement, it could be these big hitters that are primed to get the initial interest.
I’m looking forward to covering some cheaper/more innovative picks later this week.
Tomorrow, I expect to do some Live Blogging again with FI’s announcement coming. Please send in any questions you have to firstname.lastname@example.org and I’ll share the best ones here.
Big Media Premiums
Best for long term reliability with solid short term media chances: Fernandes, Neymar, Kane.
Best for possible short term media gains (but come with significant risks): Pogba, Sancho.
With 6 weeks minimum of media coming up, likely boosted via some form of FI bonuses, this can be a very obvious and very rich source of dividends in the coming weeks.
Sounds fantastic but there is a reason to be cautious – if there is a panic in the market the spreads on these players get hammered down quickly and getting out of them is difficult.
We buy them, we’d better be prepared to hold them through thick and thin.
We’re not out of the woods yet with corona and no doubt haven’t seen the last twist and turn.
Where we go for this category of player, I think we want a price that is largely sustainable in the course of “normal” times i.e they have real dividend prospects ideally both performance and media at most times of year.
And we don’t want them to have some impending cliff edge that would cause a drop if they hit the wrong bit of news.
A dream 2020 for holders.
Not immune from the drops though and he has come down from £10.46 to £9.96 today. But in context of £2.74 3 months ago… not so bad.
The dividends have been relentless too. The worry here was that with no football and no stage on which to impress he could become “yesterday’s man”.
Other players like Pogba were/are becoming much more interesting for media purposes as the will he/won’t he stories are cooked up again.
I think there is some truth in that, I would certainly not be expecting him to be winning top spot every other day for the next few months. But, he should be there or there abouts, and particularly if FI do something like pay 5 places of media he should keep dripping dividends into balances.
His long term prospects are also excellent, having convinced the majority of his performance and media credentials. Whether that is the remainder of this season or the start of next, he is going to be a player in demand.
As I’ve been saying for a long time with him, a genuinely strong performance player at Manchester United is a big deal.
The longer term blot on the copy book is the wider media review which may open up media to other leagues, potentially devaluing the EPL premium that is currently paid (to the benefit of other leagues).
Verdict: A solid pick that ticks just about every box there is going in terms of performance strength, involvement in all major competitions, his strong media pull and general trend profile.
Should get some decent media, but unlikely to be the media story of the coming months.
The media review is a longer term concern as this could damage all EPL players. However, I think the last thing FI are going to do is drop any more needless uncertainty into the market right now and wouldn’t expect an immediate impact from this.
Overall, his clear performance strength and short/long term media appeal make me confident in him as a hold.
He could be a good buy now if FI deliver a decent package of media incentives tomorrow AND we see some details from football authorities in the coming weeks that convince us football will restart in the next 2/3 months.
Pogba is a much riskier proposition than Fernandes, but shorter term, potentially a more profitable one too.
The golden thread that has always run through the Pogba trade in the last year is that if he looks set to leave the EPL the price is doomed. Anyone who said otherwise, and there were many, were just always going to be wrong about this.
An exit looked likely for a very long time. Now? It’s up in the air and that’s why his fortunes have changed quickly. And that’s happened at a good time with a huge media window now ahead.
Verdict: Not a trade I would recommend because no matter how profitable this might be, he’s always just one or two of the wrong news stories away from a collapse in price that could be severe. His true value somewhere like Juventus or Real would likely be closer to £4.
This is much more akin to 50/50 gambling than the sort of trading I go for where I try and stack the odds 90/10 in my favour.
But, if going for it, there is a significant upside. The trick is to just do it as early as possible and sell when the price is spiking after a few dividend wins.
Unless you want to take a bet on Pogba staying, avoid dithering and bank your win because relying purely on the right news articles coming is not a reliable way to trade. With this method, you can tip the odds of success more towards 60/40.
It’s also better suited to traders who have a significant amount of time to monitor news stories (which may actually be easy for many when they are on lockdown at home!).
Fairly quiet at the moment but it’s near inevitable Neymar will pick up more gossip in the coming month or two as a move gets nearer.
It looks certain he’s angling out of PSG and Barcelona is possible. This would be a big story, the type that will get lots of media coverage.
Because he’s only had 2 wins in March, his price has remained relatively stable. And, as a proven performance and media returner I think he is going to retain long term confidence whether he stays or goes.
Performance prospects possibly decline a bit at Barcelona but probably not by too much. And for short term media trading, that’s not such a big deal.
Only just 28, so he’s not quite at the point where age will start weighing in as a price drag, but it might in a year or so.
Verdict: A solid choice because there are not too many disaster scenarios. Has a strong chance of big media in the coming months, and whether he stays at PSG or goes to Barcelona he retains long term appeal and can justify an £8 price tag.
Decent chance of a good reward, but not at any obvious risk from a sudden bad headline.
As per the Transfers entry, I was not keen in early season, but felt from early 2020 he would be a decent hype hold. This worked quite nicely, avoiding a long period of relative stagnation but getting the late season bounce.
Should do well as long as the hype factors hold up but we have to be aware of the ugly truths lurking beneath this huge price tag to trade this successfully.
The first being that his performance suitability is ropey. It’s not like Fernandes where he was so strong it could credibly be hoped he’d push through at United. Sancho needs some help and we can rationally expect Manchester United to be a worse platform to play from than Dortmund.
And beyond the initial hype buckets of media are not guaranteed for English players despite the popular misconception on this. See Kane or TAA.
The transfer may also fall over, leaving holders in quite a bit of limbo holding a £10+ player who doesn’t actually return many dividends in normal times outside of specific hype factors.
Verdict: All that said, he’s got a solid outlook for the months ahead and the longer the media window and the bigger any FI bonuses the better it will be for him.
Advice still the same as in January, if you are going to get in, get in as early as possible and then try to judge a peak of hype (probably after a string of media wins, closer to the transfer time) and then know when to bank the profit. Don’t hold and hope and be the true believer mug here.
Just be wary of the transfer falling over because the spread is absolutely savage should anything go wrong. And we aren’t in the most certain of times as it is.
Long been on shaky ground, with Euro 2020 his get out of jail free card. Well, Mr Monopoly has swiped that card out from under him.
Has dropped, but not by much.
Not really picking up much media recently.
Could that change? Possibly. Holders are running a gamble with this one. If credible EPL links emerge the price could go pretty crazy. But, I am not sure they are really believable. Real Madrid, if anything, looks the move. And that is far from guaranteed as the price tag will be out of this world.
It also makes him even less likely to win performance in a tougher league. And he struggles as it is. Media prospects would be boosted at Real Madrid, though.
Neymar is also expected to move on and will PSG let both go in one window? I suspect not, it’s like declaring their ambitions over.
Verdict: The high price combined with questionable performance credentials for the money, plus weak historic media returns are a turn off.
You could say things may improve in the event of a move and that’s true. But this is already heavily priced in.
And there is a cliff edge if the transfer doesn’t materialise, which is very possible with Neymar probably the one PSG will want to let go.
I would be more inclined to wait from the outside and this. If the links to the EPL look real at any point then jumping in then would be the play in my view.
If links to Manchester United actually happen this could be a bonanza. But, it’s probably not likely it will. The asking price will be insane and possibly even out of United’s reach, especially if they want to sign Sancho.
Out of EPL moves look unattractive too, although as England captain there would be plenty of interest in that, and how he gets on abroad.
I am not sure many would see that though – the instinct is that traders hate out of EPL moves and this could hurt if it gained traction.
Verdict: Overall, he’s a solid choice who could pick up media in the coming months quite easily. And the long term value is there as a high profile player in his prime, even if dividend credentials are a bit ropey.
It will be interesting to see how a move abroad affects his price. Shorter term it could generate some media wins and encourage buying, after the hype spike, people may start to fear a drop if he leaves the EPL.
£6.72 at time of writing is not a crazy price. I think the balance is still in favour of buying if hunting for a solid premium player. There is a decent chance of picking up some solid media ahead, particularly if FI boost media dividends tomorrow.
But holders will have to watch closely for the transfer falling over, he’d likely fall back to £6 if it did.
Back Tomorrow morning with my highlights of cheaper likely transfer/media selections in advance of the announcement from FI.
This is going to be a regular series over the next week covering:
– Core “full season fit” Key Strategy selections
– Currently off trend elite veterans
– Young long term prospects
– IPD players