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Monday, it will become clear and so I'm happy to wait to see whether my recent buy has worked out to my benefit. In hindsight it may prove that I should have bought in March '21. Good luck to all holders. JJ
Replying to one's own post smakc's of Billy-No-Mates, but continuing this thread. Mostly BLUE buys showing today at 2.40-2.41 levels with some Sells at same, however again price is dropping away from its 247-249p highs earlier this week. Again, with a 51p SD on offer people should be piling in, but the Consol is now out of the bag in terms of nulifying the full SD gain. No one can accurately say if the SP will deliver a win or loss. There have been forecasts between 313p and 190p so take your pick. I think that this will take a few days to shake out and I dont expect a difinitive position on Monday. I have a concern that the consol impact on the SD "reward to shareholders" may leave a bitter taste in many mouths, it is hugely clear that TSCO have given with one hand and mostly taken away with the other, but hoping that the SP doesnt drop afrer SD ExD and this may become the "bonus" in reality. If the 245p SP was maintained, then only holding I would have enjoyed £1300 SD, but this would have been reduced to £650 actual gain after consol, (reduced shares at 245p plus 1300 minus my original investment - see below if interested ). The other issue unsanswered is will TSCO pay an increased dividend in July based on fewer shares in circulation vs the capitalisation/profit of TESCO. Getting the same 7p after they have whipped off 25% of everyones holding and so resulting in lower divi cheque would further add bitter taste.
i looked at this and decided to not buy in as the consolidation made the usual SD benefit negligible.
Buy 190 shares now at £2.41 for £458. You will get dividend of £96.76. Consolidation will leave you with 150 shares with the same Book Cost of £458. So when in any profit you can sell so dividend a benefit especially buying today!
Spindler it does also depend on your average price. It is the traders that will be taking the risk. The investor buying last year when the sp was in the low 200s have the breathing space to make an informed decision next week. Buying in the last few weeks has always been a gamble.
That nullifies the Special Dividend totally if you're lucky, if unlucky actually diminishes the worth of your holding.
A Special Dividend does sound to me like a giveaway/return of capital, on hearing such a thing the first thing that wouldn't enter your mind is a share consolidation.
Kingalf - I was considering selling yesterday and missing out on the opportunity hoped for a spike today to sell, however I like the way you've laid it out. I have 6979 shares you have made me realise that whether it goes up or down in the short term really does not matter (my funds are in an ISA so taxes N/A), you win both ways. If the price does retrace £2.04 it is a buying opportunity (imho I think it will not go lower than £2.20). The long-term trend for TSCO is up and has been since 2016. If it does go up, I see myself selling around the £2.80 level before it retraces back to £2.30 level around this time next year. It remains a decent investment that grows steadily and pays a good dividend. Personally, I am not a fan of what the board did with the special dividend and consolidation, but let's make lemonade...
alf
that's not really the full picture. It may test the lows post XD and equally it may test £3. Pension costs will be reduced, interest on loans reduced. Online capacity increased significantly over the pandemic. The consolidation is immaterial as the reduced number of shares reflects the dividend payment. Arguably for many investors not a good strategy due to the tax implications. Reduced liquidity of the shares will benefit the company and it's shareholders as the yield from profits will be divided up into a lower number of shares. EPS will also be much better.
Of course there may be wider influences that affect the sp direction in the coming months, the markets generally across the globe are at record highs when we are in the midst of a pandemic. So lots of potential 'banana skins' but as the restrictions have highlighted, we all need to eat and TSCO is well placed as a defensive investment.
I know the SD has caused much confusion but I don't think any investor thought that the 51p was really a giveaway.
Say you own 8246 shares x price £2.40 = £19,790
Your holding will then reduce to 6510 shares x price £2.40 = £15,624.
In return you will receive 0.509p per share x 8246 = £4197 which just about equates to the loss incurred by the consolidation.
As far as I can see Tesco has been in a range of 2.45 to 2.04 over the last 6 months, apart from adding 2.5b to the pension fund and following on from the share consolidation nothing else will have changed. Personally feel these could quite easily test the lower end of the band again, unless you feel adding 2.5bn to the pension pot is enough to justify a £3 share price.
Surely 1579 shares will have the same book cost? The share price will reduce to 15/19ths but same value and the divi is extra to you?? If you’re account shows profit and you sell on Monday you have gain and divi!
Clueless - well lets put it like this if the price stays static by end of play tomorrow then we will see. As if you think the main holders are going to keep the prices at these levels knowing they can buy back at same prices for less value Monday then you are all deluded.
the price would be nearer £2.00 + Divi as the Big Investors would make a killing - but they out of pocket if it stays static. Think about it, just apply common sense here. Big Players dictate the Prices in shares like this, no value in keeping it at £2.45p ish if their investments in Tesco going to be worth 20% less, we would of had Tr1's all over the place for past 3 mths if that were the case don't you think??? There would of been a mass bail out and price driven down to bring the value back up on release + divi........ But this has not happened.
Funds and Investment companies do not wait to lose 20% of their investment when they have been told about it!!
I simply hold £2000 worth of shares (minus dealing n stamp duty) and i am waiting to see what my shares are worth post divi and consolidation.
I'm in for the long haul anyway. Fingres crossed all...
Explnatory Note: Its not the current Mrs prussell1963 who's getting refurbished, its the house!! Just to clarify!!
Well, all the chat, speculation and uncertainty will be finalised starting Monday (note I say starting Monday!). I do not expect to return to my laptop and see TSCO trading at near 300p by 0830 Monday. I expect SP to be close to where it is today. However, I am more than a little concerned that even with a "stonking" SD declared and seemingly ratified, the SP has been mostly static. If any other share had declared a 20% SD then I assume there would have been a pile in from many looking to take advantage. Why hasn't this happened?? Simply because in reality the share consolidation will have a major detraction on the value of the SD. Yes you get the SD, but you give up approx 25% of your holding. I am not bright or experienced enough to give a verdict on the "new" share price as part of the capitalisation of the business as I have read so many posts I think I am confused, but there are many good points eitherway. The business will be £5Bn lighter after the payout, so will we still hold the same % of the companies value with lesser shares, I am not so sure, what I am sure is that going forward the market will determine and dictate share price from Monday, I am not holding my breath as I am sure in early days there will be a settling down as people decide to sell, hold or buy.... all will affect share price, so I will return mid/late next week and see whats occurred. In the meantime, I will go with the laudits Mrs prussell1963 has given that her genius husband has "won" £1300 towards her refurbishment program ..... I wont bother her with the details of the consol reduction / standstill etc, not until I need to!!
Looking even further ahead, whats the thoughts on future dividend?? 6.5p final last year I think, so is anyone forcasting thye next divi which is 2020 Final and I think payable July????
3.11 on Monday psml but I hope your right!!
AX
£5 Billion lost capital.
Future increases in valuation from Monday will be determined by the market.
Longtime investor,
yes I hope it stays stable (or in my case as potential buyer drops a little) and then starts to rise from then on ..
Axe-Capital,
Because they're paying out 50.93p Special Dividend on about 9.793 billion shares - that's about £5 billion cash being paid out from the company. Does that answer the question?
Mike.
lol - yeah there going to devalue Tesco by £5billion on MONDAY ARE THEY. Explain why? Tell me how they are going to knopck off £5billion in market Cap over the weekend? Pray Tell us all?
To me the entire point of this exercise is all about the BoD (just call me a cynic) trying to maintain the share price at current levels as the SP will be one of the metrics that affects their Long Term Incentive Plans and any Share Options, and so the consolidation is required to do this (as the MCap otherwise reduces by the value of the SD).
mags
''I've heard estimates from 190 to 315 ''
Crazy.
Without major trading, the share price on Monday will be roughly what is is now
Q
''as tomorrow I'm thinking of selling my shares at a profit before they reduce in number.''
My HSBCinvestdirect service is suspending trade in tesco in an hours time
hmm by some weird coincidence ,my shareholdnig divides exactly by 19 ..1 suppose that's a 1in 19 chance so not so miraculous !!
Based on todays Market cap with £9.8Billion Shares in issue / exchanged for £7.7Billion Shares in issue the Share price should equate to £3.11p on Monday. Unless Market takes the value of the TESCO PLC downwards for some reason that would be deemed to be Market manipulation as todays value is todays value according to Market Prices based on shares in issue! There maybe a sell off but it should go back to be share trading in range of £2.90p to £3.10p as previous to the ************** announcement.