Member Info for LtCaptain

Actually post RI the SP is more likely to drift down to around 23-24p in my opinion. The more i think about it, the more i'm convinced of it. At 24p the Mcap will be approx £2billion. That is approximately the current Mcap pre RI. Also what I feel RR will drift towards during mid to late November. There is absolutely no way RR will trade at an Mcap of 3-4 billion during the remainder of this year. That's too much to ask for.

This is just my humble opinion.

Megan1: where do you get 60-70p from? TERP is 54p. New shares issued at 32p. In reality you're looking at the approx 30p-35p region for picking up shares around end of November.

In short the RI is there to ensure they can keep the lights on. Thats all. Therefore i'm discounting any SP benefit from it.
SP uplift will only come from returning positive sentiment which is entirely dependant on something RR don't have any control over - resumption of long haul flights on wide body planes.

Yes in theory! However RR already have more money in the bank than the current MCap plus their other business divisions (hugely successful in their own right - Defence, Power Systems, Propulsion etc) are already being valued at zero.
Sentiment is absolutely shot to pieces here.
Normally if a RI is arranged for growth reasons then yes you can expect post RI for the value of the RI to be factored in positively. However over here it's purely for RR to maintain reasonable liquidity headroom and ensure they can cover their outrageous cash burn rate whilst dealing with the 3.2 billion of debt falling due in the next year.

The more i think of this - at 8.5billion shares in issue 30p looks damn possible. Purely based on simple maths and current market sentiment. 8.5 billion x 0.3 = 2.55billion Mcap. Roughly where we are right now.
Anyone want to dispute that?

@samb69 that's just adding further risk to the whole thing. Plus i don't do shorts. Did in the past on FX and Commodities but never on shares.

@Chughes92: why would it rise between record date and ex-rights date? There is no incentive to buy between those two dates as it's a kind of no-mans land. I think you'd see the rise in the days before the record date, and then selling immediately after the record date once people have got their rights entitlement. I don't understand why RR have several days between Records Date and Ex-Rights date. Normally these two dates are on subsequent datys or just a single day between.

I posted one possible option earlier i was exploring. Here's another one that i'm starting to think as more preferable:

Sell entire holding at the next spike (circa £1.25, shares tend to rise a little bit in the days ahead of the record date. seen it often).
Wait til mid to late November, and hope for circa 30p ( a couple of pence below RI issue price).
Use the proceeds from the earlier sale + additional capital to plough in at 30p.
Sell at all at 60p for a 100% profit.

I'm thinking this is preferable as 30p looks possible given it only equates to a 2.5billon mcap. Several months at most down the line with a stable outlook a 5billion mcap is plausible (that's still only 25% of previous peak).

Thoughts? Granted this is the more bearish of the two ideas i've been thinking about today.

@samb69: slightly wrong there. Shares yoyo'd around alot on IAG between 230 and 160 with speculation of the RI there. Once the anouncement had been made they were around 190. They then trended upwards reaching around 225 in the days before the Record date. Then 134 on Ex-Rights day. The RI price is 84p (or 0.92 euro). They're currently at around 93p having moved betwen 91p and 140ish since Ex-Rights day.

There could be further weakness for IAG before an improvement - who knows!

@patanj: the old £20 billion cap would be years away. Probably 5 years! Even then the SP after RI will only reach circa £2.60 for a £20 billion MCAP.

do you mean 25-30p after the RI and some point in November?

No, it says that the two American investment banks: Goldman Sachs, and Morgan Stanley, decided they didn't want to fully underwrite the full 6.4billion shares themselves due to the risk around the US elections and amongst other things. So some other banks stepped up and underwrote the remaining shares. They were HSBC , and BNP.

With regards to the vaccine you don't need everyone to take it up. So long as the most vunreable in society all take it up we should be good. I reckon if 10-15million high-risk and vulnerable people in the UK were vaccinated that would make enough of a difference to not need an immediate nationwide vacinnation program to get every person vaccinated. The rest can be vaccinated over several years as they are low risk.

As someone has already said - sure it might not go bust, but at the same time shareholders can still get wiped out. The government could nationalise it. Rolls is a strategic company for the UK. They're heavily involved in the defence sector providing engines for fighter jets, and submarines. I believe they're also involved in various kinds of other propulsion systems in the weapons side of things (i might be wrong on that one, though remember reading about it somewhere a while back). Also they're involved in the nuclear power sector with their power systems and components installed in nuclear power stations. They signed a deal to provide some of these components to the chinese recently.

Therefore with the above in mind, it's fair to say they're too important to be allowed to go bankrupt and shutdown. BUT, and it's a very big BUT - if it got to the stage they were going to go bankrupt they'll be taken over by an entity backed by the government and all of the share capital will likely be in their hands. Shareholders would be royally screwed in that scenario, but Rolls would live on.

@Casa: Fair point. They could indeed run out of money. However they don't need to be operating at full past capacity to to see a substantial rise in SP. They only need to show they've stabalised and the outlook is positive. At least not running a cash burn at the rate they're at now! I think as long as cash burn reduces significantly with the return of 40-50% of flights resuming and they stabilise things should look more rosy. Until then, the risk is still very much there and hence the state of the current SP.

@FEXIT: Regarding IAG i'm not sure what you're alluding to?
With IAG if you had sold your Ni Paid Rights on the first day of trading you'd have got 70p per share approx. That's how much they were trading for on the first day. New shares have not yet been put on the market. IAG are at 93p right now. Next week we may well see sub 90p and closer to the rights issue price. Around that price you can buy in using your NIl paid rights proceeds + additional capital to substancially bring down your average.
IAG don't need to be back up to 100% of past performance for you to be back in profit with the SP. Even just 50% of past would see a significant rise on the current SP for IAG.

TheDevil, What on earth are you doing with 75k invested and then claiming that you don't know what you're doing?!!!
People like you scare me! You shouldn't be involved in stock trading if you're asking questions like this after investing such substantial sums of money. You'd be better off just putting it in a fund or better still just some fixed income bonds.

Hold original shareholding through 23rd October to gain rights entitlement.
Sell Nil Paid Rights immediately upon issue.
Wait for 12 November for new shares to be brought onto the market
Wait for rump sale to commence and price to drop down below 32p over following weeks
Buy in using the Nil Paid rights money + additional capital to bring down average significantly to below 50p.
Wait 1 year to see price exeeed £1.25.
Bank 150% profit on sale.

The above is entirely possible and quite reasonable given the circumstances.

Has anyone done the calculations yet to figure out what the old SP will be in new money? For example the old peak which was around 1000p ?
Im interested to know!

Because he's one of these people who like to troll others. There's quite a few of them on these boards. They target a handful of companies at a time. In each case they hammer away trolling everyone on the board as a way of amusing themselves. For them it's like a coin flip. They can say something's going to drop and play their chances. Sometimes they're right sometimes they're wrong. On the ones they are wrong they shuffle off. On the ones they're right they keep on hammering away until eventually they are wrong and then they just disappear like that to concentrate on others where they've done the same coin flip.