TUI shares

Shocking_Blue

Dear all,
Apologies for re-posting, but would appreciate any advice on the above query. The current TUI share price puts me a tiny bit under what I paid for them a while back, but won't it fall when the new Euro 1.07 shares are traded on Jan 29th, as the share price is diluted. Therefore, now that I have my entitlement to the new shares confirmed, isn't better to just sell my existing holding now, whilst they're just a bit down on what I paid for them, before the diluted price fall.
Sorry if I've got this completely wrong.

MaxiRobriguez

Unlikely to fall as the rights issue and impact of that was announced some time ago and owners will have already made decisions on whether to buy/sell/hold based on that. 20% share price reduction in early December because of the rights issue has just been outweighed, seemingly, by positive vaccination news in the last couple of weeks. Had the rights issue not been sought then it's likely the share price would be higher than it is currently.

Whether or not immediately selling is a good idea is a different question entirely. You may want to hold them for longer if in 10-15 years COVID is long in the back mirror and TUI shares have repaired their balance sheet and operations are good. I suppose it depends on how much of the shares you own in £ and what % it represents as part of your portfolio. If it's quite a lot, maybe trim it down and use the proceeds to rebalance. If it's only a small part, maybe let it be.

Shocking_Blue

MaxiRobriguez said:

Unlikely to fall as the rights issue and impact of that was announced some time ago and owners will have already made decisions on whether to buy/sell/hold based on that. 20% share price reduction in early December because of the rights issue has just been outweighed, seemingly, by positive vaccination news in the last couple of weeks. Had the rights issue not been sought then it's likely the share price would be higher than it is currently.

Whether or not immediately selling is a good idea is a different question entirely. You may want to hold them for longer if in 10-15 years COVID is long in the back mirror and TUI shares have repaired their balance sheet and operations are good. I suppose it depends on how much of the shares you own in £ and what % it represents as part of your portfolio. If it's quite a lot, maybe trim it down and use the proceeds to rebalance. If it's only a small part, maybe let it be.

Many thanks.
Interesting that you say the current share price is unlikely to fall. Some on other forums talk about the share price being diluted once the new shares start to be traded at the end of Jan. I was under the impression that what was worth 3.97 a share today would overnight go down to 2.50 or something once those new millions of shares were made available, so it would be foolish of me not to sell my current holding of ordinary shares at 3.97 and just sit on them (just £600) and watch the value fall significantly away on Jan 29th. Maybe I've gotten the wrong end of the stick on this, but you can see the logic underlying my question?
Thanks

MaxiRobriguez

Shocking_Blue said:

MaxiRobriguez said:

Unlikely to fall as the rights issue and impact of that was announced some time ago and owners will have already made decisions on whether to buy/sell/hold based on that. 20% share price reduction in early December because of the rights issue has just been outweighed, seemingly, by positive vaccination news in the last couple of weeks. Had the rights issue not been sought then it's likely the share price would be higher than it is currently.

Whether or not immediately selling is a good idea is a different question entirely. You may want to hold them for longer if in 10-15 years COVID is long in the back mirror and TUI shares have repaired their balance sheet and operations are good. I suppose it depends on how much of the shares you own in £ and what % it represents as part of your portfolio. If it's quite a lot, maybe trim it down and use the proceeds to rebalance. If it's only a small part, maybe let it be.

Many thanks.
Interesting that you say the current share price is unlikely to fall. Some on other forums talk about the share price being diluted once the new shares start to be traded at the end of Jan. I was under the impression that what was worth 3.97 a share today would overnight go down to 2.50 or something once those new millions of shares were made available, so it would be foolish of me not to sell my current holding of ordinary shares at 3.97 and just sit on them (just £600) and watch the value fall significantly away on Jan 29th. Maybe I've gotten the wrong end of the stick on this, but you can see the logic underlying my question?
Thanks

The dilution itself may not have happened yet, but the reaction to it by investors has already happened, in early December.

Think about it from a different angle. If you owned a share of Company A which had a share price of £1,000 and Company B made a takeover *attempt* at a share price of £2,000 then the stock price would likely jump to something nearer £2,000, despite the fact no takeover has yet occurred. 

Similarly, if there was to be a guaranteed share price fall of TUI shares on the 29th January when the rights issue completes then why wouldn't everyone be shorting the stock?

Edit: And let me quantify my "unlikely to fall statement" - what I mean is it's unlikely to fall for reasons related to this rights issue. The price may well fall for a completely different reason - maybe vaccine distribution halts and timeline to re-opening the world is extended for example. I have no idea what the TUI share price will do in the short term, no one does.

Shocking_Blue

MaxiRobriguez said:

Shocking_Blue said:

MaxiRobriguez said:

Unlikely to fall as the rights issue and impact of that was announced some time ago and owners will have already made decisions on whether to buy/sell/hold based on that. 20% share price reduction in early December because of the rights issue has just been outweighed, seemingly, by positive vaccination news in the last couple of weeks. Had the rights issue not been sought then it's likely the share price would be higher than it is currently.

Whether or not immediately selling is a good idea is a different question entirely. You may want to hold them for longer if in 10-15 years COVID is long in the back mirror and TUI shares have repaired their balance sheet and operations are good. I suppose it depends on how much of the shares you own in £ and what % it represents as part of your portfolio. If it's quite a lot, maybe trim it down and use the proceeds to rebalance. If it's only a small part, maybe let it be.

Many thanks.
Interesting that you say the current share price is unlikely to fall. Some on other forums talk about the share price being diluted once the new shares start to be traded at the end of Jan. I was under the impression that what was worth 3.97 a share today would overnight go down to 2.50 or something once those new millions of shares were made available, so it would be foolish of me not to sell my current holding of ordinary shares at 3.97 and just sit on them (just £600) and watch the value fall significantly away on Jan 29th. Maybe I've gotten the wrong end of the stick on this, but you can see the logic underlying my question?
Thanks

The dilution itself may not have happened yet, but the reaction to it by investors has already happened, in early December.

Think about it from a different angle. If you owned a share of Company A which had a share price of £1,000 and Company B made a takeover *attempt* at a share price of £2,000 then the stock price would likely jump to something nearer £2,000, despite the fact no takeover has yet occurred. 

Similarly, if there was to be a guaranteed share price fall of TUI shares on the 29th January when the rights issue completes then why wouldn't everyone be shorting the stock?

Edit: And let me quantify my "unlikely to fall statement" - what I mean is it's unlikely to fall for reasons related to this rights issue. The price may well fall for a completely different reason - maybe vaccine distribution halts and timeline to re-opening the world is extended for example. I have no idea what the TUI share price will do in the short term, no one does.

Thanks.
Yes, this was my query - why isn't everyone shorting the stock. The price fell 20% or so on the day the RI was announced, and I expected it to collapse to something in the region of what the rights to the new shares could be sold at up to the 29th Jan (about 2.50 I think). I think this was on the understanding that 'TUI shares' would, once the news shares stared trading, 'level out' (not using this as a technical term, just a novice lay expression, but you'll know what I mean), i.e. somewhere between the 'old' price and the price of the 'new' shares.
Just relatedly, I have accepted my entitlement to the new Euro 1.07 shares and will pay about £1.28 after fees etc are factored in. Based on what you've said above, will they then go up in value to around what the current share price is now (in which case I will have made a bit of clear profit). Again, apologies of I've misunderstood this bit.
Thanks again.

leocat1

Can you explain what is happening with the subscription rights. I had 335 shares held as an ex employee. I decided not to buy anymore shares, but to sell my subscription rights. I read somewhere that if you hold say 300 shares, you should receive a cheque for somewhere around £2000. I received a cheque for £76.45. How does this compute?

wmb194

leocat1 said:

Can you explain what is happening with the subscription rights. I had 335 shares held as an ex employee. I decided not to buy anymore shares, but to sell my subscription rights. I read somewhere that if you hold say 300 shares, you should receive a cheque for somewhere around £2000. I received a cheque for £76.45. How does this compute?

£2,000 would be the figure that does not compute - if you own 300 shares today you could sell them as I type for £1,613. You rights to subscribe will always be worth far less. If you Google rights issues and how to calculate the ex-rights price and the value of your rights you'll probably find that c.£77 is about right.