northern rock shares

bebop

as shares are at a record high, should i sell them now and invest £5000 approx, in what??? isa's already used, a bond??? any advices? cheers.

ReportInvestor

Successful shares have a tendency to keep hitting record highs . Think about why you want to sell.

Is it because your investments are imbalanced and a single share exposes you to unwanted risk? That's fine. You could also choose to sell some, not all.

At the moment you possess a stake in the stock market that does not require an annual management charge. If you reinvest you would also have an initial charge to pay on a new fund. But considerations of risk / a more balanced portfolio might legitimately override this. It depends on your attitude, your circumstances and what other investments you have or don't have.

More about Northern Rock on this MSE thread

Northern Rock's mortgage market currently seems buoyant, although Royal Bank of Scotland very recently announced that it was going to muscle in on the party and try to steal some market share.

BTW, what a star you are to have hung onto the best demutualisation share for so long :T.

ManAtHome

Yes, they've done very well - don't forget you're also getting dividends (although obviously dropping in percentage terms).

By a strange turn of events I also have Bradford and Bingley shares - not quite as stellar, but not bad for nowt.. Shortly after NR became a bank, they started a*seing around with savings rates, so I moved my cash to B&B. Then they started.. see the pattern? It's been a long wait for the Coventry B/S though... (LOL).

equitydealer

No the dividend percentage is not falling for people who have existing shares, only for those buying today.

If you bought Lloyds TSB at around 390p for example, you'll be yielding over 8% even though the shares are currently yielding 6.5% for new buyers.

Don't take this as investment advice - with the mortgage market at a standstill and interest rates stuck at 4.5% (I personally do not see a cut in rates for several months, perhaps a year) I would be inclined to bank some profits. If the housing market does goes through a correction mortgage banks like NR, BB and HBOS may suffer. Only a personal opinion!

ReportInvestor

It's all semantics.

The yield on capital is falling.
The yield on capital invested has risen.
Except there is no yield on capital figure invested for bebop because he didn't invest any capital .

Northern Rock's incredible history of rising dividends

From 10.9p per share in 1998
To 27.4p per share in 2005

It all adds up to £723 of free dividend income for bebop.

But equitydealer's caution may yet prove to be justified. The Times today suggests that Bradford & Bingley shares (up 50% since May 2005 ) may have gone far enough for now.

bebop

great advice, thankyou in language i can understand, as we are not desparate for cash at the moment think we will hold on to them. Also about 5 years ago we bought some Alliance and Leicester shares,(350) they fell drastically afterwards, but have risen again!!! Same advice??? cheers.

steady__eddie

I am not allowed to give advice as I a not regulated by anyone (except 'er indoors) but I am hanging on to mine (N. Rock shares that is), up another 10 bob today ! and B. & B. are starting to wake up. Could there be any mileage in this http://uk.biz.yahoo.com/17022006/325/northern-rock-jumps-merger-talk.html ?

ManAtHome

equitydealer wrote:

No the dividend percentage is not falling for people who have existing shares, only for those buying today.

Yes, know what you mean - would still be an excellent return on that basis even if I'd had to buy them.. Probably better to work out ongoing return at the current price if you're considering selling though.

I've hung on to them through inertia rather than great investment sense - will probably still have them when the Chinese make a cash offer LOL (if it happens I'll remind you all of course).

ReportInvestor

bepop's shares gained another £250 on Friday

Possible reasons behind Friday's exciting rollercoaster ride

"Excerpt from The Times

".............Northern Rock provided another source of excitement for the day traders, with shares jumping more than 10 per cent at one point on talk that the mortgage bank could be a takeover target.

The initial story was the Northern Rock may be a target for a European or American peer. Nobody seemed to know what had sparked the rumour, or could name any of the potential bidders.

A second story then appeared that Northern Rock could be looking at a merger approach from smaller peer Bradford & Bingley. (B&B, which yesterday gave a positive update on trading, ended up 12.755p at 461.5p.)

A third, rather more amusing theory was that short positions in Northern Rock were popped after a hedge fund manager, in reaction to the Lonmin bid, went long on the stock in the mistaken belief that it was a miner. Disappointingly, there was no evidence whatsoever to support this tale.

A less frothy reason for Northern Rock's strength came from HSBC, which raised its share-price target to £12.20 from 995p and kept an "overweight" rating. But that call was based on potential earnings growth rather than buyout speculation.

Whatever the story, Credit Suisse was not buying it. With the shares leading the FTSE 100, the Swiss broker dashed out a note to clients advising tthem to take profits.

Profit-sharing agreements for the group's charitable trust, the Northern Rock Foundation, would present a "material impediment" to a bid, Credit Suisse argued. Furthermore, it also reckoned that Northern Rock's cost-income ratio meant any deal would provide the buyer with immediate 10 per cent dilution to earnings and limited chance of synergies. Northern Rock shares closed up 50.5p at 1150p, having earlier peaked at a record high of £12.07.........."

Times - Northern Rock chart and company information

ReportInvestor

Just a comment on the Credit Suisse point. The NR Charitable Foundation diverts 5% of burgeoning NR profits to North East charities.

bebop wrote:

Also about 5 years ago we bought some Alliance and Leicester shares,(350) they fell drastically afterwards, but have risen again!!! Same advice??? cheers.

No advice.

Just an observation that you have about £9K in mortgage banking shares. If you don't have other equity investments then you are very exposed to the risks associated with that sector e.g. possible bad debts, rising interest rates and or falling house prices. Or just that the market is not currently valuing the sector correctly. Or something might go wrong at those two companies or in their niche markets.

A&L and NRock are not the same animal, though. So if I was reducing my own exposure I'd be tempted to sell half of the NR holding to keep a little diversity within the sector.

It may amuse some to know that a large group of cross-party MPs is currently working hard to produce a paper with the pre-judged title

"The cost of demutualisation".

The cost of not demutualising would currently be over £6,500 less wealth in the bebop household and & £7,700 less chez steady_eddie :eek:.

Out of interest, why did you buy the A&L shares? Newspaper tip?

To steady_eddie

Food for thought from the Times about your Bradford & Bingley shares which have risen another 12p since the Times wrote this

bebop

A &L shares were bought from a family member who needed the cash, so shall i hold on to them? as you say they are a different animal? cheers.