What's likely to have happened with our Northern Rock shares?

dengrainger

Daniel 54

HBOS had problems which N Rock did not. You are fortunate therefore to have any worth.

But, at least you have some vaue, we have none, zero, despite our company being successful and solvent.

Mistermeaner

dengrainger wrote: »

Daniel 54

HBOS had problems which N Rock did not. You are fortunate therefore to have any worth.

But, at least you have some vaue, we have none, zero, despite our company being successful and solvent.

Then why did anyone step in?

dengrainger

Surely Lloyds 'stepped in' and it proved to be one of their biggest mistakes ever, especially as far as their shareholders were concerned?

I

Mistermeaner

http://news.bbc.co.uk/1/hi/business/7007076.stm

Start at the bottom and read up.

Seems th a bank was fooked, and shareholders voted against the hedge funds attempts to block nationalisation so while individually you may be !!!!ed off the bank was poorly run (which as a shareholder you share in) grossly overvalued and would have gone down the pan anyway.

Daniel54

dengrainger wrote: »

Daniel 54

HBOS had problems which N Rock did not. You are fortunate therefore to have any worth.

But, at least you have some vaue, we have none, zero, despite our company being successful and solvent.

Fully appreciate HBOS lost its money in different ways to NR

My point was that,even if an alternative solution had been possible,shareholders would have been so heavily diluted that a small shareholder with say £1000 of shares would now have enough to pay for a meal for two at the local Indian.

Bondholders take preference over shareholders .

I do not believe a Conservative government would have made radically different choices in respect of NR.

A solvent company does not require £41bn of government funding.It goes bust and its assets are wound up over a long time time to pay off creditors,which is something no government could have allowed at the time

Mistermeaner

Why didn't you sell your shares when you had the chance?

redux

Obviously I don't understand this as well as someone who has been running legal disputes on this subject for some time, including being told by the European court of human rights that the case was inadmissable.

One thing I don't understand is how a company can get loans and guarantees for 20 to 100 times its own intrinsic value.

Try that as a small business that is not a bank, can you get a loan for £50 million on a building worth one million?

Northern Rock did a deal with Lehman Brothers on sub-prime mortgages, and this type of trading is exactly what wiped out Lehman Brothers.

As I see it, that is down to the company management, not the Labour Party. If the shareholders didn't like the way the company was trading in the years prior to its collapse, they had 2 or 3 choices, sell their shares, lobby the directors or call an EGM.

As for save as you earn schemes in company shares, I've never been in one myself, but I have read some opinions which suggest that one is already investing enough of one's lifetime risks just by being employed by a large company, and in some cases it might be wise to diversify by running an investment portfolio that does not also depend heavily on the same company.

Daniel54

redux wrote: »

One thing I don't understand is how a company can get loans and guarantees for 20 to 100 times its own intrinsic value.
.

That is a good point.At the time most retail investors simply did not really realise how leveraged banks were , including apparently vanilla lenders such as Northern Rock.That in my view is why many did not sell as the price fell - because they over -estimated the intrinsic value of the enterprise

Lehmans were leveraged at 50:1 !

Luckily I was largely invested in funds,which all recovered.But the lesson learnt is to spread risk .Investing 101 with knobs on ( and that includes UK property )

pvt

redux wrote: »

One thing I don't understand is how a company can get loans and guarantees for 20 to 100 times its own intrinsic value.

Try that as a small business that is not a bank, can you get a loan for £50 million on a building worth one million?

But that is not what it was trying to do. It is not unreasonable to borrow £50m against a portfolio of mortgages that have a book value of £60m.

Daniel54 wrote: »

My point was that,even if an alternative solution had been possible,shareholders would have been so heavily diluted that a small shareholder with say £1000 of shares would now have enough to pay for a meal for two at the local Indian.

All the shareholders wanted, and still want, is a fair valuation. Had an independent valuer been appointed who said the company was bust and the shares worth nothing, then I would accept that. But it is manifestly absurd and unfair to appoint a valuer, tell them that they must assume the value is nil, and then ask them what the value is.

If a truly independent valuer had decided my property was only worth the price of a peshwari naan and a couple of onion bhajjis, then I would be less than happy, but at least accept that situation as fair.

le_loup

dengrainger wrote: »

But, at least you have some vaue, we have none, zero, despite our company being successful and solvent.

Did you really write that - or did a virus take over your computer?