We all know that the stock market is a truly weird and wonderful arena, full of surprises, unexpected turns and dare I say it, heart-stopping moments. It’s where dreams are made and shattered in equal measure.
While there is money to be made from investing in share placements, there are also a lot of associated risks if you don’t know what to look for. Below, I’ve highlighted some of the key questions you should answer before deciding to invest in any company and business.
Beyond the company, who is, of course, the star of the show, there are a number of key players working behind the scenes to ensure a placement comes off smoothly. Given you might not be aware of just how many are involved in the process I thought I’d give you a look at who else is involved in the process.
Secondary offerings - What you need to know: A secondary offering occurs with the issuing of new equity for a company that is already publicly traded on a market. Secondary offerings are often referred to as share placings, placements or ‘seasoned offerings’ and are typically used to attract new investors into a company.
Hotel Chocolat, the innovator of the chocolate bond, which allowed customers to invest in the business in return for repayment in chocolate, recently IPO’d and all the institutions involved in the float have since seen their investment increase by more than 30% – and the stock price is still rising.
It is a reasonable assumption that most of the readers of this blog are investors in the UK stock market or are interested in following developments in the corporate world, perhaps as prospective investors of company shares. It is not the purpose of this article to persuade anyone into equity investment but, having seen the market make strong progress over the past year, it is wise to remind oneself of the relative attractions of the natural alternative: cash.
This week’s economic news indicates that the UK economy is performing well, and certainly a lot better than many supposed-experts had predicted back in June when Brexit was being contemplated. Unemployment fell by 52,000, in the three months ending 30 November 2016, to 1.6m claimants – a level not seen for over a decade.
Before the 2015 general election, the department for Business, Innovation & Skills, then presided over by the Rt Hon Vince Cable MP, had a section devoted to improving private investor rights and preparing for the end of paper share certificates as required by the EU.
As I write, this company in the support services sector is showing a dividend yield of 6.9%. At its 52 week high, it was 5.4%. So you might think it was in the 25 stocks I mentioned in my ‘rewarding strategy’ article, but it wasn’t. This was because, even though it is in the particular portfolio I mentioned in that article, I cannot be wholly confident of the dividend’s sustainability.
ARM Holdings has been acquired by Japan’s Softbank Group. Do you mind? Some people do, either because they think ARM was sold cheaply, or because it’s yet another British champion sold overseas. Alex Brummer, City Editor of the Daily Mail, calls it “an ill-conceived deal conducted with undue haste” and “an economic error”.
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