London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
kl
''3. I have some money in my account''
That is your clear gain - money to do with as you please.
trot
''No it's not. ''
yes it is
It is clear to me that the share price has gained for anyone who used the cash to increase their percentage ownership of the operational business, in addition to the clear gain of also receiving a 7% + yield as opposed to cash earning nothing.
The initial clear gain is that investors had cash 'in their hands' to do with as they please rather than being untouchable. Very clear
Maybe the enhanced divi yield is making them more attractive to investors.The more investors climb aboard the higher the sp will also climb higher.
Lets hope so.
I too ,have today personal accepted this done deal.
Thank you for your sound advice.
I have been reading the comments on here with a little bit of amusement. The facts are:
1. I have 24% less shares in number
2. I own the same percentage of the company I did before the consolidation
3. I have some money in my account
4. If forecasts are correct I will get a bigger dividend from these 32+p shares in total than the old 25p shares would have paid.
5. It is a done deal and no matter what anyone says there is nothing that can now be done for good or bad.
6. Live life and be happy
"My point was that it is incorrect information"
Quite right, we received c24.9% by value and disposed of c25.3% by cost based on the (unadjusted) closing prices on 13 May and 16 May respectively ;-)
Interestingly, Google says that the adjusted closing price of the (new) shares on 13 May was 435.42pps which is a load of bunkum (they've calculated the adjusted share price by deducting 101.69p per new share when they should be deducting 133.80p per new share, which equates to 101.69p per old share).
Seems you're not the only one who can't get their information right ;-)
That's a joke before you take umbrage.
"Any gain is clear".
No it's not. The market has been rising the last week. You cannot therefore simply attribute the gain since the capital return with the transaction. One could claim, with equal justification, that the recent gain is entirely to do with the change in the general market sentiment and absolutely nothing to do with the transaction. I believe it's a bit of both but how much you attribute between them would be an educated guess.
trot
''I still think you are missing the point.''
The point made was -
''we've been forced to sell 24% of our shares and their value given back to us. ''
and my point was that it is incorrect information
trot
''The market value gain is less clear and more difficult to explain because it requires you to apparently create value from "nothing".''
Any gain is clear, you purchase for X and you can see the gain from ther, plus 7% + yeild from the share purchase at Xl
trot
''the number of shares you own having been reduced''
the share in the business was not reduced, The shares had a cosmetic consolidation
I should just add that given that AV is trading above the breakeven price now does not prove that there has been a market value gain because the whole market has improved since 16 May and it would unreasonable to assume that the price of AV shares would not have increased in any event (following market sentiment). That's why I'm benching the AV price against LGEN's, all other factors being equal, to try and determine whether we are better off because of the transaction or simply because the whole market has improved. I believe it's a bit of both.
LTI, I still think you are missing the point. There are two ways to look at it; the market value of your cash and shares, and the dividend income that you generate. The dividend income gain is easier to see and explain; despite the number of shares you own having been reduced, the dividend per share is being increased, and your remaining shares are expected to generate the same dividend income as previously (recognising that no dividend is ever guaranteed and that the existing dividend would have been increased by a comparable percentage in any event). So, re-investing the capital return in more AV shares, or another dividend paying share, will increase the amount of dividend income you receive. QED you're better off income wise. The market value gain is less clear and more difficult to explain because it requires you to apparently create value from "nothing". As I said, the normally accepted maxim is that "value of your old shares equals the value of your new shares plus the cash received" all other things being equal (after allowing for a few market tribulations) and that is, I believe, the basis of SFH's statement. It's not unreasonable, because the idea that you can increase value by simply making a capital return (or special dividend) would seem, on the face of it, illogical. However, given that both the EPS and DPS will have been increased by the capital return (if the new shares trade at the breakeven price) it's then not unreasonable to assume that the new shares might eventually increase in price such that EPS and DPS return to pre-capital return levels. Now this is not a straightforward analysis because it assumes 1) that the original EPS and DPS figures were the "true" values, which they weren't (there was a premium built into the share price to reflect the expected capital return) and 2) that the premium fully reflected the capital return, which it didn't (substantially most but not all). The jury is still out on "proving" the market value gain but I think that the relative comparison to LGEN does support the proposition that there has been a gain (and that the "true" EPS is currently c0.5% less than LGEN's rather than the c2.0% it was before the capital return).
Yeah same here iv done 18 buying transactions over 3 years they all disappeared put everything back in 414 that is now my average and only that transaction showing was when before it was 350 it s like aviva is basically a new company
Vernski…No, the figures are still messed up across the board.Halifax and many others have not updated yet but if you divide your overall cost by the number of shares you will get your new share price. Halifax have said they will be updating when the consolidation is complete. I assume they are giving themselves until the 31 May 22. They said it should be done automatically but if not to ring them and they would do it manually.. covering all bases there. It is annoying but should sort itself next week.
I also need something explaining.....I bought two tranches of Aviva, the second tranche was to average down. My average then became 332 per share. Now according to my account my average has become 437, is this correct?
Trot
It is a fact that that people are better off if investing the cash, increasing their percentage ownership of the operational business and with the addition of a 7% + yield rather than not getting a return .
LTI, Be reasonable and take SFH's post at face value. If you follow the maxim that the value of the business before = value of the business after + capital return, then in principle you are no better off (investment value wise). You say that people had the opportunity to buy at 390p but that is disengenuous. Nobody received their capital return on 16 May, so only those who were able to inject funds from other sources were able to afford themselves the opporunity to buy at 390p and a number of us were locked out for several hours, so weren't able to buy at the bottom (although a further opportunity did arise later in the day). Actually, on 16 May, those that held were worse off than they had been on 13 May (investment value wise) and it's only in the subsequent days that the value of the business after started to exceed the break even price of c404pps. We also can't quantify what impact the general market improvement has had on the AV share price. So, nothing is certain.
Now, I personally believe that we are (or will be) better off and that the maxim does not hold true because the surplus cash was not actually fully valued prior to the capital return (on a discounted cash flow basis) and that the overall value has been enhanced (it would have been likewise enhanced by a special dividend), however I would not disparage SFH's comments or suggest that they are without merit because, although the maths and the financials say we should (ultimately) be better off there is absolutely no guarantee.
sfh
'' I was just explaining in non-technical terms that we are no better off,''
why not?
investors have been given cash to do with as they please, rather than getting zero return on it.
Many would have used the money to increase their percentage ownership of Aviva with some buying shares at about the 390p level and therefore already have made a 10% capital appreciation, and not forgetting of course the high yield that will come with the additional investment.
By what stretch of the imagination is this not a gain over having cash earning NOTHING.
Suppose you own 100% of a company and the company has 100 shares each with a value of £1. You reduce the number of shares to 76 and pay yourself £24. You still own 100% of the shares but the company is now worth £24 less than it was before because you have taken that money out of the company. However you still expect to make the same amount of profit each year and you are going to distribute the same amount, say £10. Now instead of paying a 10p dividend for each share you pay 13.1p per share.
"SFH300, Is it not the case though that we still own the same percentage of the company plus we now have cash as well?"
VistaMan - yes it is. I was just explaining in non-technical terms that we are no better off, as Chevy indicated he/she was expecting a payout.
LTI - I did preface my comment with "effectively". Know your audience.
sitting on the balance sheet
sfh
''we've been forced to sell 24% of our shares and their value given back to us. ''
How many more times?
You were returned CASH siting on the balance.
Shares were NOT purchased from you.
Your original shares WERE consolidated
Thank you everyone
I understand just thought for some reason we were getting a big payout
but I get it now
I may re invest at some point
IF they increase it,
which they most likely will.