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calamari - I was on the verge of selling the rights, but after reading through the information again, it became clear that the 88p being referenced here and elsewhere is a provision amt for funds - and when trying to work out if there is a benefit of selling the rights and buying immediately on the market, it isn't quite that simple. You have to take the risk of the FX charges and changes in exchanges into account. If you had sold the rights yesterday and waited until today to buy in, you would clearly have been better off.
thanks luddite - I hadn't checked and forget that changed!
mowzerrocks , there is no stamp duty payable on IAG shares or on the rights IAGN.
and also don't forget that stamp duty is not applicable on share rights issue, but is on the purchase of new shares.
And I think this is the key point from the message I got from HL:
However, in order to secure your application we are requesting that you make 88p available for each share you wish to buy – this isn’t the amount you’ll be charged but is an amount which should ensure you have enough cash after allowing for exchange rate movements. In the unlikely event that 88p is not sufficient we’ll contact you again.
So chances are the 88p is very much an overestimate.
* current market rates for rights
So at the current market rights for rights - it would be better to sell and and buy on the market. But it all hinges on what the conversion rate will be - 88p isn't fixed. It could be less dependent on brokers' conversion fees. Is that right?
Well Im guessing he'd only sell the new 88p bought holding for the profit, and retain his initial holding, and just wait the necessary 5 years for them to recover past £2 :)
Solar, he could do that & make 8p profit on each discounted share, but if he bought his original shares at say £2 he would lose a £1 on each of the 2 he needed to get the 3 discounted ones in the first place!
*12p profit per share I mean.
@calamari, re ""couldn't we just sell them then for more cash then selling the rights?"", I think what bobby was asking was - Can he make a profit by buying the rights @ 88p, and then when he gets the shares on 7th Oct, if the share price at that time is say, £1, sell them straight away at that point at 8p profit per share. And as far as I can see the answer is yes.
The question/gamble is simply whether by the time you have your new shares, having exercised your option to buy, if you want to sell them straight away will the share price be more or less than the 88p you paid for them. You'll only be able to make an instant profit if it's higher.
I have opted for rights but it doesn’t show translated into shares yet, would you know why?
Calamari,
Thanks. I do not know the charges so still contemplating
So you say better to sell rights ( IG just let it done over the phone, and that is subject to exchange rate etc I guess) and then buy shares
Or
Sell part of my IAG real shares to buy the complete rights..
Let's have the time out of the equation as whatever I do, I will make sure all the money is still invested in IAG as I am looking long term
Why didn't you sell all your full shares and buy IAGN for 67p , you could of had 14 179 shares
Engineer.....I was in the same quandary today......I decided to sell all of my full shares so that I can buy all 11700 right issues at about £9500ish.
Job done, I was starting to fret what to do but it is done now so will just sit back and wait for a year or so to see how they perform. I really expect a strong and rapid recovery once all this covid **** is kicked in the but.
Calamari,
Your points are correct. So I give you a question..
So I have IAG shares and rights in my ISA and I can not add cash to it.. .
At the beginning, I was thinking to sell part of my rights to exercise the other part. But now, I thought it would be easier to sell part of my real shares to exercise all of the rights.
As you said, in ideal situation all should result the same thing.... BUT
Considering the broker fees, tax, etc, (and the fact that selling right in IG should be done over the phone and not sure if there is any spread etc), which way do you think would yeild more?
So just to confirm what is the date you must sell or buy rights ?
Checked my iweb share dealing account and new shares are showing up , but they separated in a new line . So new shares at 73.9284p, and original shares average dropped down to 151.3218 ( from 225) .
Both have different latest prices ( both average SP are still higher than latest price but I'll hold for longer term ).
So I am assuming once RI has been completed/ closed next week , they will bundle all shares together? , then I get a new average in total?
Sorry if it sounds like a weird question .
GLA !
Hi Calamari
I am now to this forum but have been reading the messages on the iag rights issue over the last few days and your responses have been incredibly helpful. I hold my shares in an ISA with HL and I have decided to sell the rights. The price for the rights appears to have stuck at 68 p for most of the day on the HL website irrespective of fluctuations in the IAG share price. Is your instinct that the rights price will go higher or do you think the activity to come will probably bring it lower? I appreciate you don't have a crystal ball! thank you
Can't believe anyone wouldn't get the reference!
Cool, yeah, I understand that but assuming they don't fall very quickly, or instantly, to the 90p ish level, couldn't we just sell them then for more cash then selling the rights?
Sorry for what is a very basic question, but we're buying at 90p: are the shares essentially guaranteed to drop to that or around that once the RI is sorted?
@huffy69 - Im also getting those vibes
Sell, I don't have the funds to invest bit even if I did it just doesn't feel right at the minute
Fully agree Stephen - I think its all about having faith in it. And if you have the spare £££ then get stuck in!
Can I ask what gives you the faith?
I believe a company like IAG who was doing just fine and valued at around £4 average pre COVID and only dropped because of COVID will bounce back especially with having such large companies spread across different countries...
I have bought my allocation and asked to buy more (only about 800).
Ultimately, if you believe in it then keep the faith. If you don't believe in it any more then try to get out at the most financially rewarding result you personally can