Royal Mail privatisation... Would you?

sebtomato

Well, share price will rise sharply on the first day of trading, and then will fall sharply on the second day, once lots of people are selling. On the third day, it will go up again as people buy the cheaper shares they couldn't initially get. Therefore, the third day is the best, and second day the worst.

IronWolf

sebtomato wrote: »

Well, share price will rise sharply on the first day of trading, and then will fall sharply on the second day, once lots of people are selling. On the third day, it will go up again as people buy the cheaper shares they couldn't initially get. Therefore, the third day is the best, and second day the worst.

That's purely conjecture. Facebook tanked in its first week of trading.

Tombola591

sebtomato wrote: »

Well, share price will rise sharply on the first day of trading, and then will fall sharply on the second day, once lots of people are selling. On the third day, it will go up again as people buy the cheaper shares they couldn't initially get. Therefore, the third day is the best, and second day the worst.

When you refer to first day of trading, do you mean conditional or unconditional trading? Btw, I realise no-one can know for sure whether or not shares will fall or rise, or by how much.

sebtomato

IronWolf wrote: »

That's purely conjecture.

No, I can read into the future...

IronWolf wrote: »

Facebook tanked in its first week of trading.

Facebook is a bit different from Royal Mail, as it does not make much profit and does not provide a 7% dividend 6 months later...

Given that the financial institutions have tried to buy £30 billion of shares from Royal Mail, worth only 10% of that, the demand clearly exceeds the supply, and this will last at least for a few days of trading. I think the share price will be stable at least for the first 6 months, as it will be a good income investment for many people. beating interest rates on saving accounts.

sebtomato

Tombola591 wrote: »

When you refer to first day of trading, do you mean conditional or unconditional trading? Btw, I realise no-one can know for sure whether or not shares will fall or rise, or by how much.

General investors will be able to trade their shares from October 15. But those that applied for shares through brokers offering conditional dealing will be able to trade from Friday 11th.

Therefore, we can expect some large variations on Friday and then on the following Tuesday.

Probably lots of people selling end of Friday, so price dropping by Monday, and then dropping again on Tuesday, to then recover

IronWolf

sebtomato wrote: »

Facebook is a bit different from Royal Mail, as it does not make much profit and does not provide a 7% dividend 6 months later...

Given that the financial institutions have tried to buy £30 billion of shares from Royal Mail, worth only 10% of that, the demand clearly exceeds the supply, and this will last at least for a few days of trading. I think the share price will be stable at least for the first 6 months, as it will be a good income investment for many people. beating interest rates on saving accounts.

The price hasn't been set, so the dividend yield is unknown.

Also the dividend isn't being paid in full in the first year, only an interim which is much lower than 7%. The dividend they give is what management say they "would have paid" if they had been a public company all year.

Old_Slaphead

sebtomato wrote: »

No, I can read into the future....

Witch, witch - burn the witch !!

sebtomato wrote: »

Given that the financial institutions have tried to buy £30 billion of shares from Royal Mail, worth only 10% of that, the demand clearly exceeds the supply

Presumably they don't want that many but have just grossly overegged their tenders in order to get a few more than the bare minimum (just like everybody else).

sebtomato

IronWolf wrote: »

The price hasn't been set, so the dividend yield is unknown.

Also the dividend isn't being paid in full in the first year, only an interim which is much lower than 7%. The dividend they give is what management say they "would have paid" if they had been a public company all year.

Price is very much likely to be set to 330p per share, meaning a yield of 6% to be paid in July, taking into account the partial year...

theGrinch

from the 1980s, I seem to recall most if not all the privatisations (due to underpriced) got of to a flyer on day one. Its in the govt's interest to keep the institutions and individual investor happy on this one else they will have problems with a GE 18 months away.

sabretoothtigger

sebtomato wrote: »

Given that the financial institutions have tried to buy £30 billion of shares from Royal Mail, worth only 10% of that, the demand clearly exceeds the supply, and this will last at least for a few days of trading. I think the share price will be stable at least for the first 6 months, as it will be a good income investment for many people. beating interest rates on saving accounts.

There is some chance of genuine demand from index trackers. The review is coming up in December and looking at RM it stands on the cusp of being included hence trackers will buy

Have they already done so ? Im not sure but I think buying upwards of 300 is a fair bet and it'll probably hit 400 as a ceiling where posties and others who have no real interest in keeping money tied up this way will sell.
Most people have mortgages and/or debts and so investment even a good one is less attractive.
When those sellers go it'll run in line with FTSE sentiment, right now we're heading down steadily

financial institutions have tried to buy

What I really want to see is volume of selling. If someone has a fancy data package, level 2 and all that then look at the vwap price and post it here, I forget which site gives this info freely but most dont.
Many funds buy only with reference to moving averages, so buying spikes is not in their remit I think. You get this on the back of AGM, no more then 10% above 10 day average and so on. We dont have 10 days so I think they'll go from vwap