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I obviously meant if you're long at close on 27th. Even I'm getting confused now!
As MJK1 says, if you're long from 28th you receive the rights. You receive these rights in the form of new nil paid rights shares. These shares have value and are tradable on the market (ticker RRN?), just like the RR. shares.
In fact, the majority of the value of your position will now be in the rights shares. If RR. trade at close on 27th at 240p you might expect them to trade at around 80p the next day, with the rights trading at about 48p. Given that you get 10 rights for every 3 RR. shares that means the total value of the rights per existing RR. would be 160p.
In other words, whilst for every existing RR. you lose 160p in value in RR., you gain 160p in the nil paid rights shares.
what about the PI's that got in from £1 - £1.50, they will instantly be in profit and cash in
selecta6, what confuses some is the record date (at close 23rd). It doesn't just confuse PIs it seems to confuse those who advise PIs too.
It's crazy and has been like it for the 20+ years I've been trading. You have to ask why it isn't explained better.
Selecta6, there was a discussion on here for much of Friday as to whether there was eligibility if one bought after the 23rd. That is where my confusion began... ;)
From market close on 27th to market open on 28th there will be no difference in the profit/loss on any holding even though the share price will drop through the floor. This is because what you loose on the original shares will be equal to what you make on the new 32p shares. What happens after it opens on 28th is down to market sentiment so could go up or down. Shorts will not be making money due to the ex-rights share price drop and longs will not be loosing money.
I guess, if you are not buying or selling before cop tomorrow, its now only about what your average will be in comparison to the share price after you take the rights (assuming you do). I think (hope) there will be good interest at the revised price.
I don't see what is so confusing here.
If you buy/hold until close of play on 27th, you get the rights.
If you don't buy/hold then, you don't get the rights.
So, price will fall away first thing on 28th.
Ploeaxe
If u don't mind me asking, how do you make money in a rights issue by being long ? Lots of people here are shorting, I get it if u got in at 106p but what about from this pricing ?
So I see the drop to 80p did not occur. As you say it is a very confusing issue. Thank you for your continued advice. Presumably then, all things being equal, it will continue to rise until the end of the 27th.
I see that RR hasn’t dropped to 80p Poleaxe, so it is as you say a very confusing issue. So apart from the initial drop here, all things being equal on the market, it should continue to rise until the end of the 27th?
It’s difficult to find reliable information and you have to work a lot of it out for yourself. Sorry, but you can’t rely on what you get told by a broker customer service desk, or a company’s investor relations desk. All they’re really interested in is getting you off the phone ASAP. It would be different if it were their wealth at stake but it’s not, it’s yours.
People buying shares this morning tells you more than some dodgy website or some telephone support kiddo. There are the people with skin in the game. No-one on their rights minds would be paying 240p for the shares if they didn’t believe they’d come with the rights entitlement. Without the entitlement the shares would only be worth about 80p.
Traders made an absolute killing on the HMSO and IAG rights issues. They’re now doing the same at RR. Wealth moves from the ignorant to the somewhat less ignorant.
It’s difficult to escape the conclusion that there are vested interests at stake in not educating PIs and they’ll present information in as confusing matter as they can get away with. Knowledge is power.
You need to put the work into trying to understand the workings of the market, otherwise you’ll just be nutrition for the numerous sharks out there.
Morning Poleaxe, thanks for your reply.
I don't claim to be an expert, but that was my interpretation of the information distributed to shareholders about it. I sources it from mainly the RR website as what IG sent out somewhat contradicted the official media release.
Please correct anything I wrote that was incorrect. I have seen a lot of people misleading others on here so I try to take my Information from source. If I have said it wrong and I can see it written somewhere official than more than happy to be corrected as always happy to learn :)