Shares question...What does this mean???

lush_walrus

As a child my parents decided to invest money for my future in shares, which have been happily left to one side until I started to notice that one set seems to be about to peek, which are held in Excel.

Aparently there is a potential take over bid coming from Deutsche Post, who have bid £3.7billion for the company valuing each share at £12.44. Due to this the shares have risen to a record high of £12.35 (ish!).

Anyway, linked to this I read in the paper this statement, and havent got a clue what it means and whether it means I should sell the shares now, or whether I should keep them etc.

It said 'Excel's board unanimously recommended the offer, which will see shareholders get £9.00 in cash per share plus 0.25427 shares in Duetsche Post. Investers with less than 5000 shares are being offered a free dealing service. A loan-not alternative is being offered to those shareholders not wishing to take the cash.'

From this I interpret that the amount of shares I will hold if the bid goes ahead will be decreased and to make up the difference between the decrease in shares (value and number) and the value now, they will give me £9 per share that are free to cash in as long as I have less than 5000.

Is that right, or am I completely not understanding?

Also am I best to just keep them or get rid now?

I'm sure I have just asked complete dumb questions but I really havent a clue!

Thanks guys.

Tim_L

It's a matter of judgement really.

My observation would be that there is very little point holding shares if you don't know whether you should hold or sell them. You should either try to understand the business and its prospects so that you can make a judgement, or else sell the shares and invest the money elsewhere. In effect by holding a share that you don't have a view on you are gambling blind - it does amaze me how many people hang onto a random share they have somehow got hold of through privatisation or maybe a sharescheme without any real idea why they are investing in that company.

Trackers aren't a bad alternative as you'll get generalised stockmarket growth without having to be too concerned about the performance of an individual share. Or as I say, you can take a more active interest in individual investments.

The deal is that you will receive cash or a loan note (this is used to avoid capital gains tax) for £9 per share, then you will receive about 1/4 of the number of shares you currently hold in Deutsche Poste stock. If you have less than 5000 shares you'll be able to sell them free of charge for more cash (or you can choose to retain them). If you have more than 5000 then you can sell them using a normal sharedealing service.

The value you'll get from the takeover will be roughly equivalent to the price you can get now. Often takeovers are a decent opportunity to trade out of a share at a premium, and to be honest if I was in your position I'd probably cash in now (or perhaps when the takeover goes through given the fact it seems to be recommended by the board and will probably go through - sometimes these deals founder and it's sometimes best not to wait). But it really is a matter of your own judgement.

monkeydust_2

would sell or stick in a stop-loss (although its affect might be limited in case of a sudden annoucement i.e. takeover dropped)

adminannie

It also amazes me how patronising some folk can be, if Lush new as much as you he wouldnt be asking the questions, and I thought that was what this forum was for, thats why I come here. Annie

lush_walrus

Tim_L wrote:

It's a matter of judgement really.

My observation would be that there is very little point holding shares if you don't know whether you should hold or sell them.

I'm sure you are right that I shouldnt be involved with shares, but as I explained the reason I have any involvement in shares is due to my parents buying them for £1 a share when I was a child, now they are worth over £12 a share so although I don't understand my parents did and they appear to have made the right choice!!. It wasnt through anything other than my parents knowledge that I have them, but as they aren't here I thought I would ask people who may know.

I by no means want any involvement in shares, just wanted a little bit of advice thats all.

mbamick

I agree with everything mentioned above, particularly the view of AdminAnnie. This site is about helping others.

I've held a portfolio of about 30 shares for almost 20 years; buying & selling [and being bought out of] various companies in that time. You really need to research the companies carefully, and have some knowledge of what it is that you are looking for, if you hope to make a profit from investing - and not many people have the sort of time to spare anymore. So I suspect that you are better off taking the money, and also selling the holding in Deutsche Post too.

Mind you, I always think that the downside of selling, is that you then have the dilemma of what to do with the spare cash. Presumably, you've already thought about what to do with your windfall? {A little luxury spend, or reinvest in ISA / premium bonds}

Tim_L

Sorry, I wasn't being patronising, I was explaining why you shouldn't hold random investments - whether from a gift, privatisation, or purchase - and suggesting an alternative (i.e a tracker) which is less effort. The point is (just as Mbamick says) that you need to research holdings in detail so that you have some idea whether or not you believe the gamble is worth continuing. You can't hold investments just because they've historically been successful, and in fact there's a good argument for selling at what seems to be the height of spectacular performance: there's an old investment saying that "you never go broke by selling at a profit".

I most definitely did not say that you shouldn't be involved with shares. What I said is that if you choose to own shares you need to draw your own conclusions on whether you should hold them or not by understanding the underlying business you are investing in. My suggestion would be that if you don't have the time or inclination to do this, then you can dabble in the markets by investing in much easier vehicles such as trackers. Which as it happens is what I do, because I really haven't got time to learn about the details of what particular companies are doing.

I've read and re-read what I've said to try and find out why it might have been thought patronising, and honestly can't see anything except the answer to the question that was asked.

mbamick

Don't take it personally Tim_L. Having re-read your OP, I've no doubt that you meant well.

I must admit that I'm a contrarian when it comes to share dealing, and have a dislike of trackers. Simply because - by thier very nature - trackers must abide by the herd instinct of the marketplace [and that isn't always right]. We only need to look at the dot-com boom to see that. If you do find time to research a share, you might want to have a close look at STANELCO [the link isn't the company's website, but the work of someone that is keen on the business - not me, either].

The company has a couple of interesting products; the one with most potential being a system of sealing supermarket containers [such as those that you buy your fresh meat in] using radio waves. This has the benefit of localising the heat generated from the sealing process - and Asda / Walmart has found that it extends shelf-life by at least a week. Stanelco has the sole patent on this technology, and is tied into Asda / walmart for about another 6 months. But when I think about the amount of fresh produce, sealed in such containers, across all supermarkets - the global potential is very attractive.

As I said, I enjoy researching companies and following the markets - when I can find the time; and i particularly like this one. Happy to discuss, either in this forum or via pm.

Tim_L

I agree with this to a large extent: if you have specialised domain knowledge you can obviously make more informed decisions on which shares to pick. Though there are some caveats, which are that you are well behind the large fund managers for information and new information very rapidly gets priced in.

When you look at the hard figures though, it's difficult to show that even very well informed fund managers significantly beat trackers. They have a slight advantage in bear markets because they can trade out, but this can be lost when markets turn up. So for the lazy investor, trackers are a decent thing to use as you can do pretty much as well as the average managed fund at lower costs.

And these can also be run in a contrarian way too (as Deemy2000 has pointed out, if you understand market psychology and the herd instinct you can trade a profit in almost any scenario). The key is to lock in gains and get out before a market turns when the widows and orphans are piling in.

The key points are these really: if you don't know about a share, don't hold it. If you do know why you are holding it then you have a good chance of being right.

cloud_dog

mbamick wrote:

If you do find time to research a share, you might want to have a close look at STANELCO [the link isn't the company's website, but the work of someone that is keen on the business - not me, either].

The company has a couple of interesting products; the one with most potential being a system of sealing supermarket containers [such as those that you buy your fresh meat in] using radio waves. This has the benefit of localising the heat generated from the sealing process - and Asda / Walmart has found that it extends shelf-life by at least a week. Stanelco has the sole patent on this technology, and is tied into Asda / walmart for about another 6 months. But when I think about the amount of fresh produce, sealed in such containers, across all supermarkets - the global potential is very attractive.

mba, I think for those not currently in Stanleyco the SP is one to watch for the moment. I don't doubt the company / product are very good and have potential I'm just not sure atm whether the SP is too high and has a little bit more retracement to go before it moves on. Just y opinion.