What if HBOS Goes Ahead with a Right Issue?

missymouse

Earl grey thanks for the advice. What do you think to the Tail Swallow idea of buying more shares by selling some of your existing shares so you don't have to fork out cash?

something_girl

Thank you Earl Grey, that post was very useful

napoleon

HBOS share price is 273 pence, lower than the rights issue price of 275 pence. You have no real choice to make, it's as dead as a dodo.

earlgrey_3

missymouse wrote: »

Earl grey thanks for the advice. What do you think to the Tail Swallow idea of buying more shares by selling some of your existing shares so you don't have to fork out cash?

It's as broad as it's long. That's more usually done when you're in a position where you can't put in more cash, for example in an ISA where you've invested all of your allowance already. (The reason for doing that is to avoid the dilution that occurs when there's a difference between the original share price and the rights offer price.)

In this particular case, unless something causes the share price to surge before the deadline then all bets are off and there's no decision to make. Obviously don't pay more for shares than you can buy them in the market - and that's only for the brave.

In the longer run, maybe a year or so on, banks are likely to be a good investment. Between here and then who knows.

vido

Thank you Earl Grey for clarifying this - I received the Rights Issue through the post today and was absolutely baffled. Now, to a layman like myself, the situation as I understand it is that the Rights Issue is a total shambles and HBOS have only got themselves to blame. Last year my HBOS shares were worth about £8000 and now they're worth about £1890. Instead of a Rights Issue the Board should now be considering Resignation en masse.

something_girl

you must have a similar amount to me.... what a bummer eh?

earlgrey_3

If it's any consolation remember you only crystalise a profit or a loss on the day you sell. When that happens the price could have bounced right back up or gone way down further. Good luck. Meanwhile, you have to decide whether it's still a good investment at the current price or to sell and cut your losses.

And don't go beating yourself up. Several of the big name pension funds and unit trusts, especially income funds, have lost a packet due to being heavy in banks. They are the big investors in bank shares, not the small percentage of private investors. For every seller there's a buyer.

One thing for certain is that while some banks could be taken over or even disappear, the ones that come out strong will be making massive profits due reduced competition in a few years time. The only tricky bit is knowing which they'll be.

vido

yea - a total bummer - but they WILL go back up (I hope!). You've just got to BELIEVE

something_girl

yeh BELIEVE! Let's have some positivity in these threads

Earlgrey... you post nice

ianmr65

earlgrey wrote: »

One thing for certain is that while some banks could be taken over or even disappear, the ones that come out strong will be making massive profits due reduced competition in a few years time. The only tricky bit is knowing which they'll be.

Good Posts EG!! I'd put money on HSBC coming out of this even higher up the food chain than they are now. They've been consistantly bullish throughout, and were the only bank that spoke out against the BoE liquidity measures... Sounded like they were positivley keen for some competitors to go to the wall!!.