Standard Life Shares

Gorgeous_George

I considered applying for £10,000 additional shares but bottled it and only applied for £2,000.

I'll keep them for a month and then until I have either a 25% profit or a 5% loss.



GG

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Good luck with your decision, GG .

LOST

Most new floatations almost always see some underpricing in the short term.

i.e. the price of the shares jumps in the first day of trading,

loads of plausible reasons to explain why the underwriters leave money on the table, after all, the pricing of new issues should be at or very close to their true intrinsic value, but most do experience this - the extent to which this occurs is dependent on many factors.

I did my thesis on US IPO (initial public offerings) and the most noteable findings for the phenomena were:
1. the underwriters underprice in order to provoke investor interest
2. the degree at which the underpricing occurs relates to the uncertainty of the company itself
3. the list goes on and on... can't remember much more (it has been 2yrs ago since my study)


Anyway, back to the shares, I will be holding onto them and see what the price is like after a few months when the underpricing tends usually to die out (from my findings on US IPOs anyway). But as I don't think there is much uncertainty on Standard Life itself due to its long history and its strong presence, I do not think that the price of the shares will see significant jumps.

Also, the sweetner of offering further shares to shareholders after a year will make me wait until then to consider my position as I do not need the money now. Also, the market's (according to my boss who is an investment manager) seem favourable to show good growth over the short-to-medium term and I hope that good gains can be over the next few years.

That's my decision for now, and my reasoning behind it..... everyone should justify in their own minds their decisions depending on their own needs:
if you need the money now - go get it
if you want to hold on - hold on
if you ain't got a clue - you will probably go with your instinct unless you consult a professional

good luck

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Here's a useful long term marker to bear in mind over the next couple of weeks in case there is a rollercoaster ride ahead:

The FT

Analyst assesses Standard's fair value at 260p a share

"Standard Life's fair value was put at 260p a share by analysts at Sanford C Bernstein yesterday, a small premium to the life assurer's embedded value of 250p.

Embedded value is a measure of the worth of in-force policies. However, Bruno Paulson, analyst at Sanford C Bernstein, said this was a long-term fair-value estimate and not Standard Life's expected issue price........."

And in other articles
Standard Life claim something of a last minute rush for the shares by members. Some current guesstimates being bandied about by other observers are:

Issue price 220-230p (giving an "average" windfall of £1,450 compared to the £1,700 originally anticipated).
First day finish 232p-245p. (With 2/3 bookies/anlaysts going for 235p and the other for 240p).

Link to more comment on Wednesday & Thursday

And a reminder that the price will be set after the index has closed for business on Friday, so everything is still up in the air.

DocProc

The share application cheque money has been taken from the current account today, the 6th July.

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Here's how the FTSE100 and the Insurer sector have changed since 13 April when Standard Life shares were reckoned to be worth 265p if they were to give an average windfall of £1,700 and a basic windfall of £490.

How do prices compare on Thursday 6th July 2006 with those on 13th April?

Company/Index		Price		Price		% compared	Fall compared
		       13-Apr		6-July		to 13-April	to 13-April

FTSE100		       6029		5870		97.36%	       -2.64%
							
Aviva		        800		748		93.50%	       -6.50%
Friends Provident	195		180		92.31%	       -7.69%
Prudential		659		601		91.20%	       -8.80%
							
Average LifeCo						92.34%	       -7.66%
							
[b]Standard Life[/b]							
([b]estimated[/b])		265 (April)	245 (minus 7.66% by July)
			

Gorgeous_George

RI

Could it be that some investor's are selling shares in the insurance sector in readiness to buy in SL, thereby maintaining their spread of FTSE shares?



GG

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What a nice thought, GG. A few on the site must hope you are right.

I tend to think that insurers usually fall further when there is market uncertainty - which is what we have had recently.

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Around 228p per share is the current speculative expectation in the latest press comment

This seems a little on the low side, maybe helping those who have put in to buy more shares, but not those who have requested an immediate sale. I wonder if the final price set might not be a tad higher, especially if the institutions today feel cornered by high investor demand.

The "grey market" for shares is 235p, suggesting a potential first day profit for member/customer stags like GG of around 18p per share made up of 7p (price difference) + 11.4p (5% discount) minus dealing costs.

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Damn Aviva .

Their announcement that they are looking to purchase in America has hit the insurer sector at just the wrong time for Standard.

What a coincidence.