LLoyds Open (Exchange) Offer NOV 09

cheekykid

00ec25 wrote: »

The "book cost" shown against these rights is meaningless

Am just checking my halifax account and I can sell my "rights" right now for 17.50 at 2,364.24 so obviously the 3k book cost isnt "meaningless" and it seems i have actually "bought" these rights and losing on them £700 thus far.

Granville23

Thank you 00ec25, Rollinghome for your replies. One quick question Rollinghome, what happens if one buys the RI shares that are listed as LBGN which are currently 17.5p as against LLOY which are currently 54.6p.
Bearing in mind i am not an existing lloyds share holder but do bank with lloyds

00ec25

cheekykid wrote: »

Am just checking my halifax account and I can sell my "rights" right now for 17.50 at 2,364.24 so obviously the 3k book cost isnt "meaningless" and it seems i have actually "bought" these rights and losing on them £700 thus far.

Oh I give up!
:mad: to forum ettiquette - how on earth did you end up owning so many shares when you are clearly clueless and unable to understand repeated explanations.

before the rightrs issue LLOY shares were around 80 - 90p. When the rights were announced the price fell to 55p ish - ie down about 38%. Your book cost reflects that split.

Have you asked the Halifax yet?????????????

muymalestado

cardsharps wrote: »

... Everytime Lloyds gets into a mess they create from nowhere a few billion more shares and the best thing is mugs fall over themselves to buy them!!

Gritted teeth are not the same thing as falling over one's self.

Rollinghome

Granville23 wrote: »

Thank you 00ec25, Rollinghome for your replies. One quick question Rollinghome, what happens if one buys the RI shares that are listed as LBGN which are currently 17.5p as against LLOY which are currently 54.6p.
Bearing in mind i am not an existing lloyds share holder but do bank with lloyds

If the nil paid rights are bought then the right to buy shares at the offer price, 37p, passes to the purchaser. Doesn't make any difference if the purchaser is an existing shareholder, a customer of the bank, or the mistress of the chairman.

Richard_DandR

cheekykid wrote: »

Am just checking my halifax account and I can sell my "rights" right now for 17.50 at 2,364.24 so obviously the 3k book cost isnt "meaningless" and it seems i have actually "bought" these rights and losing on them £700 thus far.

Yes, you are correct.

You origninally purchased 10,062 shares at a cost of £9,162.86.

On the ex rights date, Halifax have split this into two to reflect the additional holding. The calculation goes something like this:

10,062 shares at 56p = £5,634.72 (66.5559%)
13,483 Nil Paid at 21p = £2,831.43 (33.4441%)
Total £8,466.15

56p and 21p being approximations of the first day dealing prices for the two securities.

Then take your original cost £9,162.86 * £5634.72/£8466.15 = £6,098.42

and £9,162.86 * £2,,831.43/£8,466.15 = £3,064.44

This shows the reallocation of your original book cost between the two stocks. Halifax obviously used slightly different prices to arrive at the figures in your example.

I, like 00ec25, am surprised you have committed so much money whilst having so little knowledge of the basics. Is this a fault of the forum, where it can be made to look so easy?

If you went to Sainsburys at bought a pack of Jaffa cakes for a £1 and there was a buy one get one free offer, the two packs would have cost, in effect, 50p each. Part of the cost of the first has transferred to the second. This is similar to a bonus issue.

If instead of the buy one get one free, you are given a coupon with the right to buy an other pack at 37p (rather than £1), that coupon would have a value as it would save 63p on your next purchase. So in this instance you have paid £1 for a pack of Jaffa cakes together with a coupon with a value of 63p. So again your original cost is shared. This is a bit like a rights issue.

Of course next week when you go to use your coupon, you might find Sainsburys have cut the price of Jaffa cakes to 70p, making the coupon less valuable.

Rollinghome

Richard_DandR wrote: »

So in this instance you have paid £1 for a pack of Jaffa cakes together with a coupon with a value of 63p. So again your original cost is shared. This is a bit like a rights issue.

Now you'll have everyone at MSE asking Lloyds to swap their rights for Jaffa cakes instead of shares.

Richard_DandR

In a few years time, Lloyds shares could be worth less than a stale Jaffa cake.

welshmoneylover

The last comment has hit the nail on the head, I'm wondering whether to bother at all with this RI. My cheque is sat in the envelope next to my laptop.

Oh, what to do? lol

x2-zero

welshmoneylover wrote: »

The last comment has hit the nail on the head, I'm wondering whether to bother at all with this RI. My cheque is sat in the envelope next to my laptop.

Oh, what to do? lol

I am thinking the same and not going to bother,i only have a few hundred shares anyway.