Binck log outMonday February 9th 2015 the online broker Binck will open the books. The first earnings report after a quarter full of misery. Quite a few figures to check. The consensus is their profit will drop a lot compared to last year’s fourth quarter. I’ve bought a few dozen puts this week. Count on them to deliver results which fall short of even the lowered expectations.

Alex Asset Management in downward spiral

First of all there’s Alex asset management. The idea to invest with lower risks with an automated system selling when markets drop is naive. Markets can behave like this for a year or two ; but trying to time the market with this simple idea will never work in the long run. Period. Missing a few of the best stock market days will ruin your result.

See the results over 2014 for the asset management division. Clients will start to realize they are investing in some kind of folly. If investors realize this, they will (and they should) withdraw their money. It’s not an underperforming stock they’ve invested in, but far worse : a system which will never work. Assets under management will drop below 2 bln, maybe even approaching 1.5 bln.

Some of those terrible v-shape movements in the market lately. Binck announced to fix the problem by adding US stocks. Adding more colors won’t help a thing if you’re betting on the wrong system. Guess what, stocks rise and fall on the other side of the atlantic as well. Binck blames it on the non-trending markets. Sure.

Impairment on Alex

In addition, the VEB has started an investigation in the terrible performance of Alex. Let’s assume the automated asset management will continue to underperform – as any experienced asset manager will expect. There’s a possibility of a significant impairment around the corner. It’s not a side activity, but was seen as a key driver of growth.

Active traders moving to DeGiro

Most money comes from active traders. Jumping in and out of single stocks, turbos and options. Especially the latter can ignite a series of trades (rolling the short calls). Well, this can be done against much lower fees at contender DeGiro. Old people investing a little bit now and then aren’t the cash cows for any brokerage. This being said, the Bols IPO is still bigger at Binck than competitors. A number of 2000 clients signed up for the shares, with DeGiro having 300 clients for Bols.

Number of accounts will remain the same. But if any retail investor is like me, then the boring passive investments remain where they are (Binck, Lynx, IB) but the active trading will be done from a brand new DeGiro account. This will hurt Binck – as they are dependent on a small group of very active traders. Their website is slick, but not ready to pay for it.

Binck client flow given to HFT sharks

Finally, there’s the conflict with DeGiro. Binck was accused to sell out retail orders to HFT sharks. Probably by accident due a dumb router. Still, DeGiro seems to be correct. Binck announced to sue them. Talk is cheap (supply excess of demand). They won’t do it. Binck is hoping everybody will forget about it. Don’t count on it.

Interest rates are zero

In a high interest rate world, there’s free money to be made. After all, they have a bank license. Get a nice interest spread on all the money clients have in their accounts. Unfortunately for Binck, the interest rates aren’t what they used to be.

Unable to sell Able, Pieter Aartsen fired

The firm had reached a deal to sell Able to French investors BlackFin. Suddenly the sale was aborted last November. Well, bad luck one could say. Blame it on the French. The fact is the whole unit has been dismantled afterwards. This Able / BPO unit does not exist anymore and the responsible director, ceo Pieter Aartsen has been fired.

Able / BPO will be slowly liquidated, according to sources. This in sharp contrast with the official statement the unit may eventually be for sale again. Curious what their statement will be this time. This is quite a big deal. And a disclaimer here, didn’t have this information when I bought the puts this week.

Not heading for guru status

Not really my niche to predict direction of stocks. Expect the results to be awful, but by the time you may read this I risk looking like a fool. Won’t update this post monday, head for for the latest news on monday morning.