Reduced Price HBOS shares

Tozer

napoleon wrote: »

Have you not watched the news anytime in the last 6 months?

Why would anyone want to 'invest' any more money in a failing company?

"Failing company"? Really, their profits and yield look pretty good to me. It is short-term liquidity (with all banks) that is an issue not the long term fundamentals.

Tozer

debbie42 wrote: »

If you have shares totalling, say, 18K, and buy another 11K, then, assuming the market doesn't react to the cash injection, you'll have shares worth 29K. OK, the market might rerate the shares due to the better liquidity, or it might tank as others have suggested.

It's not like share options. All that is happening is cash is being injected to the company, and shares are being issued to fund it. It isn't like the company has discovered a money tree somewhere and is rewarding the existing share holders out of the goodness of their hearts.

Completely agree. My point is that the banking sector is at a substantial discount to its medium term asset value. Therefore the price of banking sector shares look attractive generally and in respect of the rights issue, very attactive.

Interestingly most brokers have a hold-buy recommendation for HBOS.

purch

It is short-term liquidity (with all banks) that is an issue not the long term fundamentals.

Unfortunately, without a short-term injection of Cash there won't be any Long-Term for the fundamentals.

A rights issue to raise cash, not to make an acquisition or to grow the business is not a normal occurence.

All that rubbish purporting to be 'assets' that the Banks have 'pawned' to the BOE in return for liquidity, will return to those Banks in the not to distant future, and all that generously donated tax payer Cash will need to be repaid.

Thats what the rights issue is for.......no acquisitions, no growth, no added value.........just survival.

ad44downey

Tozer wrote: »

"Failing company"? Really, their profits and yield look pretty good to me. It is short-term liquidity (with all banks) that is an issue not the long term fundamentals.

You shouldn't take the pronouncements of the directors of these banks as gospel. They have a vested interest. And they have been proven in the last few weeks to be very economical with the truth, and that's putting it kindly.

ad44downey

Tozer wrote: »

"Failing company"? Really, their profits and yield look pretty good to me. It is short-term liquidity (with all banks) that is an issue not the long term fundamentals.

Their share price hasn't more than halved for no good reason. And the quoted yield is past-tense. The dividend is to be slashed!

Hemel_2

napoleon wrote: »

Have you not watched the news anytime in the last 6 months?

Why would anyone want to 'invest' any more money in a failing company?

Rubbish - failing company.

The bank is being very realistic about the future and not saying that everything will be fine (or in denial). have a look at tuesday'a agm if you've got the time... you can skip over to the questions, but I listened to the most of it.

http://www.hbosplc.com/shareholders/AGMWebcast.asp

purch

The bank is being very realistic

'Just four days after Bear Stearns Chief Executive Alan Schwartz assured Wall Street his company was not in trouble, he was forced Sunday to sell the investment bank to rival JPMorgan Chase for a bargain-basement price of $2 a share, or $236.2 million.

JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago. It marked a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.'

He was being very realistic too !!!!

MiserlyMartin

Very true. Oh let them buy. Let these people think they are getting a bargain. It'll all assist on the way down.

Cozworth806

To answer your main question, it depends if your father holds the sahres asa certificate or in a nominee account.

If it is the former then you just need to complete a stock transfer form, if it is the latter then you can't. He can only sell them using that broker, unless he gets a certificate first, in which case there will be a cost involved.

The rights also have a value, which unless you are going to forget about that and not pay your dad their value as well means that these are not a bargain, as the indicative rights value is 50-60p. (£200ish)
Current price 465p (5x465= £23.25) + 2 rights @ 275 (£5.50) equals £28.75.
Divide by 7 to come to new share price following dilution = £4.10 per share

Per Right value 55p (normally slightly less than that on the market however)

The share price of HBOS will drop after the rights are available as there will be more shares in issue, to an indicated 410p. You (or your father) may well want to put a further £440 in (£640 if you buy the shares and compensate your father for the loss of the nil paid rights value) but in fact each share will cost £4 (outlay plus lost money for selling rights)

10p a share? Is it worth it?

Tozer

ad44downey wrote: »

You shouldn't take the pronouncements of the directors of these banks as gospel. They have a vested interest. And they have been proven in the last few weeks to be very economical with the truth, and that's putting it kindly.

I have more confidence in corporate governance in the UK than you obviously.