Member Info for Poleaxe

Yes Keepcalmncarryon, if you take up your rights at 32p you'll be able to sell them as fully paid RR. shares some after 12th November. Who knows, if the market is kind perhaps you'll be able to sell them for 80p. Is that the kind of 'profit' target you're looking for?

I ask, because it begs the question why you didn't sell the rights yesterday at over 50p? Even better, at 68p on Wednesday?

@fahmad (and anyone else), if you've instructed your broker to exercise the rights I think they'll probably be able to let you revoke this, provided you tell them in time. I doubt it would make you popular though!

Thanks @fahmad. I wasn't aware that brokers would let you do that. Aren't you effectively selling RR. short and then covering when your rights are fully paid? I know you can do that with CFDs. I didn't know the likes of HL would do that with shares accounts. If they do, I've learnt something.

I keep on banging on about this but the cost to you of exercising the rights isn't just 32p. It's 32p plus what you could have got had you sold the nil paid rights shares.

Given that the RRN nil paid rights shares track at about 32p below RR. shares the logical conclusion is that taking up the rights costs you the same as simply buying more RR. shares in the market, like anyone else.

The value in the RRN shares you now own has come at a price. You've paid for them in the loss you suffered in the value of your original RR. shares when they went ex-rights on Wednesday.

If you want to invest in s company, rather than buy shares for the rights it's often cheaper to bide your time and wait for the rights issue to clear.

Keepcalmncarryon, sorry but you've fallen for the financial conjuring trick. It's classic misdirection of showing you the rights discount in one hand whilst taking away from the other. All the matters is your overall investment.

There's no sudden cliff edge at 32p. The more the price falls, the more you are down.

At the moment you could sell the rights for 35p. Yet you are contemplating exercising them at 32p in order to sell at 64p and make "100% profit". Can't you see the madness in that?

Plus if you instruct your broker to take up the rights you're locked in and won't be able to sell until after 12th. In the meantime you could suffer the agony on seeing the price go down and not being able to sell.

mline, which is why the company has paid £55m to have the rights issue underwritten. It won't matter to the company what the share price is. They'll receive the £2bn regardless.

The underwritters are the main reason why the rights are priced as low as they are. If the rights had been pitched higher they'd have had to pay more for underwriting, or perhaps not got it at all.

If the rights bomb and no-one takes them up (that won't happen - they'll always be some suckers) the underwriters will fork out £2bn and get a 77% stake in the company.

Keepcalmncarryon, can you explain the logic of why it's not an issue as long as it stays north of 32p? I'm assuming you're not an underwriter. I can understand why it might bother them.

Why use 3SRR? IG do 18% margin on RR. shorts. They'll be limits on how much you can short but should be enough for most small time punters.

Why have people been shorting using an instrument like 3SRR? Can they be used in ISAs & SIPPs? There are surely safer ways to short - e.g. CFDs.

taiz, if those people taking up the rights are planning to sell as soon as they get allocated the fully paid shares, why on earth didn't they sell yesterday? I think one or two people here sold the rights for 68p. Good on them!

Yet some people seem so wedded to take up these 'bargain' 32p rights and they'll sacrifice their brother's grandmother to get hold of them.

What's the attraction of committing 32p to take up rights in the hope you'll still be able to sell the fully paid shares at 72p some time after 12th (don't trust your broker to have set them up at open when the pros are selling), when you could have simply sold them nil paid for 68p yesterday?

Rony, please, please do some reading into what trading cum rights means, what trading ex rights means and the market claim procedure.

Thanks for that ShareCrow. Hopefully that will put to bed any lingering concerns about having to buy before 22nd in order to be on the register for close on 23rd (or whatever it was - I rather lost the will to read). It should make it easier when the next rights issue comes along!

The Channel Tunnel another example of the "they will not fail , the world cannot have them fail" mentality. Sure, the Channel Tunnel survived and is still operating. It's the ordinary shareholders who failed.

Too many investors take a half-full approach and are easy prey to the discounted rights blag. They greedily look at the upside from their 'discounted' rights and overlook the other side of investment – risk. They then squeal it’s someone else’s fault when they’ve taken a risky punt and get wiped out.

Just supposing Rolls-Royce really is as up ****e creek as some here suggest (I'm not saying I agree or disagree with them). In some way or another the profitable and strategic parts of the business would be saved, but what do you think the outcome would look like for ordinary shareholders?

Yes larkinjersey.

Is there anyone else here old enough to remember Marconi? Another great British company of strategic importance in telecoms and engineering. It was another "the government won't let it fail" story. Were the ordinary shareholders bailed out? What do you think?

I may be wrong but when there are such heavily discounted rights perhaps the RRN get 'too cheap' because of the pressure of sellers who are tail swallowing? With HMSO/HMON it was dramatic (possibly exacerbated by FTSE 250/350 index funds having to sell the nil paids!)

I mentioned 3SRR to a few seasoned trader friends last night. It wasn't something they were aware of (me neither until recently). The consensus was none of us would touch it as a trading instrument. Perhaps that’s us being unduly conservative but, as yesterday’s shenanigans show, you do need to be on the ball and understand implications of the small print.

Good advice larkinjersey.

When thinking about closing a trade in my view is you should try to ignore the price you entered at. I expect we'll all done it sometimes. We've seen a holding start to drop back and checked what price you bought at. If you're still sitting on a nice profit it's tempting to bank it fast, before it goes lower. If it's drifted a little into loss you're tempted to hold on, to let it come back. You can end up with the classic of running your losses and cutting your winners.

Instead of checking your buy price, ask if you would be buying now, as a new investor. If not, why are you holding?

What matters it where you think the price will go next, not where you bought it.

I noticed there was a question about auctions yesterday. For those who are interested in getting a bit more serious about trading than the average punter posting here, I suggest you take a look at the downloads on the link below. Knowledge and hard graft are key to success at trading and understanding how the system works gives you an edge. If you're lazy and hope to rely on others on bulletin boards for information, you're going to struggle.

https://www.londonstockexchange.com/trade/equity-trading/sets

Even if the government 'stepped in' it's a mistake to think they'd leave any meaningful value for the ordinary shareholders. The question would be asked as to why tax payers’ money should be used to bail out people where greed got the better of their judgment in punting on a failing company.

Well said larkinjersey. The idea that the ill-informed opinions of a small time punter can any meaningful influence the market cap of a FTSE 100 company seems ludicrous. Like you, I think it displays an insecurity in one's investment decision.

Even broker recommendations don’t have that much effect and even then only in the short term.