Lloyds share offer

[wemorgan]

Does anyone fully understand the Lloyds share offer that has recently been announced? (Details here)

When other banks have carried out rights issues in the past 12 months the offer price quickly became larger than the share price. So the shares were only/mostly bought by the under-writer.

Today Lloyds shares are 70p with the offer price being 38p.

Anyone with a crystal ball dare say whether the share price will drop to the offer price between now and 4th June?

Thanks for any advice/opinion.

 

[WLeg]

no idea...but let me know if you hear anything !!

 

[yachtman]

Does anyone fully understand the Lloyds share offer that has recently been announced? (Details here)

When other banks have carried out rights issues in the past 12 months the offer price quickly became larger than the share price. So the shares were only/mostly bought by the under-writer.

Today Lloyds shares are 70p with the offer price being 38p.

Anyone with a crystal ball dare say whether the share price will drop to the offer price between now and 4th June?

Thanks for any advice/opinion.

I might be wrong , but sounds similar to hsbc did a similar thing earlier in the year.

option 1 take the offer & pay the 38 p/ share & keep
option 2 take the offer & pay 38p and sell on offer day or later at new price
option 3 do nothing & if share price on take up day is larger than 38p you get the difference, if less nothing.

The option price is pitched that the normal shares should be above 38p on offer day.

A method of bribing you with your own money for the dilution of the share base.

Dont know how you stand re CGT on this though.

David

Ps HSBC initially fell, but recovered & there was a payout on offer day.

 

[Geezer]

Beware, I took up the RBS share offer at £2.

 

[crockers]

As LLoyds Bank closed last night (tues) at 100.3 the discounted price to take into account of the issue is 76.6.

Closing price today was 70.5 so at the moment LLoyds are at a slight loss over Tuesday's close. So if no movement in their price between now and issue date you are losing on Tuesday's close - but may still be up on YOUR buy price - depending what you bought at.

Trouble is a lot can happen between now and June 5th so watch them closely.

 

[crockers]

Dont know how you stand re CGT on this though.

.

If you buy shares at 38p and sell them at a higher price - usual CGT rule apply.

Unless you total gain for the year is over the amount allowed then no return is necessary. (Depending that is if you are trading .... if you are then I believe that if you sell over around*£30k of shares - no matter if the profit is less than the CGT amount - you have to file a return even if it is a nil return)

* I am not sure as to the exact figure here - check with your tax office.

 

[stevesey]

As LLoyds Bank closed last night (tues) at 100.3 the discounted price to take into account of the issue is 76.6.

Closing price today was 70.5 so at the moment LLoyds are at a slight loss over Tuesday's close. So if no movement in their price between now and issue date you are losing on Tuesday's close - but may still be up on YOUR buy price - depending what you bought at.

Trouble is a lot can happen between now and June 5th so watch them closely.

Banks were slightly down to today - so that's part of the additional drop, plus people who have qualified selling a portion of shares to fund the a back at 38p.

12 months ago rights issues were failing because bank share were unpopular, falling and overpriced. Now issues are more competitively priced to help to ensure success.

 

[wemorgan]

Dont know how you stand re CGT on this though.

If I bought the new shares I'd buy them through my ISA, so would be free of CGT, thankfully.

 

[Dryce]

Banks were slightly down to today - so that's part of the additional drop, plus people who have qualified selling a portion of shares to fund the a back at 38p.

12 months ago rights issues were failing because bank share were unpopular, falling and overpriced. Now issues are more competitively priced to help to ensure success.

The Lloyds issue is a bit difference. There is a defined value of the shares that they're punting out to the market which is why there is this differential.

Banks are still pretty wild. Just look at the % volatility during a single day.

 

[crockers]

The Lloyds issue is a bit difference. There is a defined value of the shares that they're punting out to the market which is why there is this differential.

Banks are still pretty wild. Just look at the % volatility during a single day.

Not just banks - look at insurance companies too... I have been day trading both sectors...funded my camera this way..

 

[Dryce]

Not just banks - look at insurance companies too... I have been day trading both sectors...funded my camera this way..

I suspect that there an awful lot of people doing this.

Which is further increasing the volatility.

 

[crockers]

I suspect that there an awful lot of people doing this.

Which is further increasing the volatility.

I doubt very much if personal trading affects the market much compared to asset management groups / hedge funds etc

 

[Dryce]

I doubt very much if personal trading affects the market much compared to asset management groups / hedge funds etc

A proportion of trades are people not buying based on the future expected value/income but on the short term expectations of those expectations.

At the moment the bank prices are like the speed of an engine with a dodgy fuel pump and a PID controller that has too high a D gain. They splutter every so often and don't keep steady speed when actually managing to keep running for a while.

Now normally I would guess that the small speculators would have minimal impact. But with the banks at the moment I think that there are a lot of people taking punts (including quite a few here) and there is almost too much interest.

 

[saorbust]

Your opinion is backed up by some of the commentary in the market - most independent brokers for private clients are reporting large levels of interest in buying and selling bank shares. I've day traded the banks for about 3 months and doubled my money, but the volatility is very high, so buyer beware.

The lloyds offer looks good - but you have to be aware of what you don't know as much as what you do know. Ultimately if you are looking for a short term gain then be very careful. If you are taking a longer view - it might be a different perspective. For reference I usually look to acquire stock for 3-6 months as a minimum.

Ultimately it's your money and you'd be advised to seek professional advice if you want to get serious - note none of us are qualified on here to give your advice.

Regarding under writers buying the shares - yes they insure them at the offer price for a fee (effectively undertaking to buy the shares which aren't sold at the offer price, for a commission). They get a discounted price to provide liquidity, and just because they don't buy them at offer price - doesn't mean the institution won't buy them. Corporate actions departments are different to the asset management departments - hence chinese walls and so on.

Get's complicated now !

 

[wemorgan]

I decided to buy the additioal Lloyds shares today. Simply because I believe 38p is good value as a long term investment and the total investment is fairly modest anyway.

I found this BBC article useful.

The offer ends tomorrow for those interested.

 

[SilverSaloon]

lol. i recieved a document the other day saying that my 2 (YES TWO) shares are worth 20p each

stamp used was 1st class.

 

[Dryce]

I decided to buy the additioal Lloyds shares today. Simply because I believe 38p is good value as a long term investment and the total investment is fairly modest anyway.

'Good value' is I think an overstatement

They're still more of a gamble than a calculated investment.

 

[wemorgan]

'Good value' is I think an overstatement

They're still more of a gamble than a calculated investment.

'good value' .......in a non-technical more my gut feeling kind of way......should I be applying more technical rigor in my share purchases?

The new shares cost me the grand sum of £110, which I agree may be worth £0 one day.

 

[Dryce]

The new shares cost me the grand sum of £110, which I agree may be worth £0 one day.

I think you've got the analysis sorted

 

[Koolvin]

LLOY doing well today