Member Info for Poleaxe

shamI89, of course, someone else has bought the nil paid rights that others have 'flipped'. Who knows what their intentions are. They may be have bought them as a quick geared trade, or they may have bought them to exercise the rights and get a slightly cheaper way of investing in RR. I wouldn't expect a huge rump placing on 12th.

Cosm, as others have explained, the 6.4bn rights have already been admitted to trading on 28th. The only difference between now and after 12th is that they currently trade nil paid. After 12th they'll be fully paid.

This is a FTSE 100 company and I'd hope/expect the price to be driven by experienced investors. An experienced investor knows that it's only worth taking up the rights if the share price is going to increase from the level it's at now. Otherwise they might as well sell their rights nil paid now and put their funds to better use. Only inexperienced investors would take up the rights with the idea of banking a 'quick profit' on 12th.

If you want to relate the current ex-rights price of RR. back to the cum rights price use:-

4.333 * RR. (ex-rights) - 106.667

Simples!

If you haven't done so already, SNR statement probably worth a scan.

TBH Dinvesotoy, you may have understood what you were saying about leverage, I'm not sure everyone would understand that:-

"Because 32p is permanent and the SP keep growing, to keep up RRN acts like leverage now by 2.1 (when RR up 2 percent, RRN about 4.2) and will grow as the difference keep increasing. "

means that the RRN gearing/leverage decreases when the RR./RRN price goes higher.

I've had no significant position either way since the closing auction last Monday. I was flat at close on Tuesday as I had no desire to be allocated rights, long or short.

I was hoping there might have been a RRN/RR. arb trade (as there was with HMON/HMSO) but IG won't let me open new positions in RRN, long or short. Perhaps other brokers will allow.

I've no strong opinion here long or short. Even if I did, I'm not stupid enough to think I could influence the price of a FTSE 100 stock by posting my views here. It may sound odd, but I'm genuinely trying to help out people who are new to rights issues, so as they're not misled by some of the nonsense that's been posted here.

The RRN gearing decreases if the RR./RRN price goes higher, it increases if the RR./RRN price goes lower.

Apologies @Arsenal17. I'd misundertood and initially thought you were another deramper.

Dinvesotoy, it was in reply to you saying "32p offer was too low (market spoke and doubled it to 70p-80p)", implying a doubling in value.

I was pointing out the value you receive in the rights is offset by the 70 % fall (234p to 70p) in value of your original RR. shares since last week. You can't look at the plus side of the equation and ignore the minus. I think most holders understand this now, when they come to tot up their portfolio.

Dinvesotoy: "Because they know this is a big opportunity + the 32p offer was too low (market spoke and doubled it to 70p-80p)"

lol, talk about glass half full. You're conveniently overlooking to 70% fall in the original holding since this time last week. Rights come at a price.

Job losses often don't translate to share price falls. Often the market views it as a positive that the company is taking action to reduce costs and is taking the opportunity to clear out the dead wood to become leaner and more efficient. It's easier to do that when you can claim it's necessary, because the company is on its knees, rather than when the company appears to be booming.

Yes @shamI89. I also find it odd that with other rights issues I've seen people bang on about taking up the rights because they don't want to be diluted, only to sell then at a 'profit' as soon as they trade fully paid. Er, sorry guys, you've just been diluted in the same way as you would have been if hadn't taken up the rights!

@IsleworthSpy
Sorry, I find it hard to reply because I have difficulty comprehending your numbers and why you even mention TERP. Judging by your number of posts I assume you're an experienced investor and have an understanding of rights issues, so there must be some confusion going on somewhere.

As I see it, the RR. shares went ex-rights on Wednesday. That’s when the 6.4bn new shares were admitted to the market and commenced trading on a nil paid basis. On 12th Nov there won’t be any further shares admitted, it’s just the rights will commence trading as fully paid RR. I don’t see there’s a reason for a significant price move on 12th. The price may be a dip in the morning as the rump gets placed. They may also be held down for a couple of days as some PIs who took up the rights are tempted to bank their ‘profit’.

Which brings me on to the point I was trying to make.

I’m sorry if my previous comments were interpreted as advising people to rush out and sell their nil paid rights shares. That wasn’t my intention. Obviously I don’t know any better than anyone else where the price will be after 12th. The point I was trying to make was for those inexperienced with rights issues, who have the idea that by taking up their rights at 32p they’ll be able to bank a quick profit by selling the shares on 12th. Whilst you probably will be able to sell them for more than 32p you shouldn’t ignore the fact that you might do better by selling the rights nil paid. Specially, what is the point of taking up the rights at 32p with a sell price target from 12th of 70p to bank 38p 'profit', when you could simply sell the nil paid rights at 39p? If you plan on taking up the rights in order to make a quick turn you need to be confident that RR. will be trading higher when you come to sell than they are now.

You've got it Keepcalmncarryon. If you're planning to take up your rights and your target is to sell your fully paid shares at 71p, you might as well simply sell the nil paid shares at 39p and spare the complication and market risk of being locked in for several days (I doubt all brokers will have them setup to sell at open on 12th).

If you take up the rights you are investing in the company and increasing your exposure to its fortunes and misfortunes. You don't profit from the rights process as such. You only profit if the share price subsequently rises, and you will lose more if it falls.

Personally I think they're a risky punt that could halve or double in price in the coming weeks, perhaps both. I doubt even the management can predict the future with a high degree of certainty, let alone punters posting on bulletin boards.

That's interesting @fahmad.

By the looks of it HL don't act on your instruction until their deadline. So you still had the RRN shares booked on your account and were able to sell them at 68p. Well done for getting that price. Well done to HL too for having it booked the nil pais shares to your account and available to trade on Wednesday. Some brokers can be a bit slack.

It's good to know it's that easy. On the HL web site they say:-

"Can I change my mind after sending you my election?

If you wish to alter an instruction you have sent us please contact us on 0117 980 9912 and we will do our best to accommodate you. If your election has already been acted upon, and forwarded to the company's registrar, this may not be possible."

Yes dtrade, I'm trying to help people make to make logical decisions and not be swayed by emotions like 'dilution' and 'averaging down' and "being in profit on rights I bought at 32p" etc. If that's influencing them, sobeit.

RRN are the nil paid rights. They trade at 32p below RR. If you're only taking up the rights with the intention of immediately selling to "take a profit" you might as well sell the RRN now.

Keepcalmncarryon, sounds like you originally had 1,260 shares at 238p = £3k worth.

You've now received your rights. You got these in the form of nil paid rights shares. As these were issued in the ratio 10 for 3 you've received 4,200 nil paid rights shares.

These shares are tradable under the RRN ticker. If you wish you can sell them on the market. At close yesterday they were priced at 39p. Alternately you can pay an extra 32p to convert them to fully paid RR. shares. You're not really buying RR. shares for only 32p because you already own the the value of the RR. shares, less 32p.

You're down because Rolls-Royce is not valued as highly as when you bought the shares. That's tough. That's the investment risk you took. Taking up the rights will only help you to get your money back if the share price rises. If it stays where it is, you'll be no better off. If it goes down further you'll be worse off through taking up the rights.

No-one can say for sure where the share price is going from here. IMO it could easily halve or double in the coming weeks, perhaps both. It's your call.

Keepcalmncarryon, you've still not got it have you?

Instead of paying 32p to take up the rights in order to sell for 70p you could simply sell the rights.

Have a look in your account. You should see your nil paid rights shares. They should be valued at 39p. Why would you want to pay another 32p in order to sell your fully paid rights at 70p? Why not just sell them now, nil paid, for 39p?

Take up the rights if you think the shares are a good investment, not because you think paying 32p for them is going to give you a nice quick earner. It doesn't, because you're throwing away what you could have otherwise got selling the rights.

Keepcalmncarryon, when you elect to take up your rights at 32p you are also electing not accept the proceeds you could have otherwise received from selling the RRN nil paid rights shares. For hopefully obvious reasons, RRN track about 32p below RR.

Consider the cost to you of taking up the rights as being the same as buying the RR. shares in the market, at the point you commit to taking them up. If you think they'll be a good investment at that price beyond 12th November, go for it. Just don't be lured in simply by the apparent 32p cost price.