HBOS shares advice...

[Arch]

This is probably such small dice in financial terms it's hardly worth bothereing with, but I thought I'd ask people's advice...

Thanks to being a saver before they went public, I have a little stash of HBOS shares, which just sit and give me a little dividend each year. Now HBOS are having this additional shares issue, so I've got various options.

1. To buy all the rights (the right to buy the new shares at a fixed price of £2.75 when they are issued) I'm entitled to (87 of them) - cost £239.25
2. To buy a portion of my entitlement - cost - depends how many I buy, at £2.75 each
3. To sell some in order to buy the rest - cost, nothing - and I guess it means having more shares - although of course, each share will be less of a stake, because they've issued more shares.
4. To sell all my rights straight away - possible gain, depends on market price of the rights at the time of selling - currently 12.5p each, so we're not talking big money - about a tenner currently, if I understand it right.
5. Do nothing, and they'll sell off the shares I'm entitled to at the end of the offer and I get any profit above £2.75 per share, less expenses (as long as it's more than an fiver in total - less than that, they send to charity).

Yeah, ok, I said it was small fry. I don't want to spend any money (don't have any to spend!) so, it's 3,4 or 5. Anyone reckon which is the best bet? I know the amounts are piddly in most people's terms, but I really have no idea what's likely to be best. It's not like I depend on the share income or anything, so my first though was to do 4 or 5 - I guess it's a gamble on the predicted market value of the shares after the issue date - I have no idea what that's likely to be... But would it be better, if the amounts are tiny, just to have more shares for the long term (although still a reduced total stake of course)?

 

[domtyler]

If you are currently skint and would welcome a few extra bob then just cash them in.

 

[Arch]

If you are currently skint and would welcome a few extra bob then just cash them in.

Is that option 4 (sell the rights) or 5 (sell the shares the rights entitle me to)? Just wondering which is likely to gain me the more extra pennies, since pennies count...

Speaking of which, I found a nice shiney one in a puddle last night...

 

[Crackle]

We got one of them too. The six month trend is currently down, down, down and down.

Hmmm, let me see now....................

 

[rich p]

Their year high was 1024p and they're now down to 274p (or so). The chances of me buying any more of their shares after that performance is slim to non-existant!

 

[domtyler]

Their year high was 1024p and they're now down to 274p (or so). The chances of me buying any more of their shares after that performance is slim to non-existant!

Ah ha, the trick is to snap them up when they are low and then wait for the next peak, a large organisation like HBOS is highly unlikely to go under (although of course even that is not impossible). You should really approach share buying as a long term venture anyway and buy into funds on a regular basis. People who try to play the market almost always get their fingers burnt, sometimes spectacularly!

 

[Crackle]

Marconi......

 

[domtyler]

Is that option 4 (sell the rights) or 5 (sell the shares the rights entitle me to)? Just wondering which is likely to gain me the more extra pennies, since pennies count...

Speaking of which, I found a nice shiney one in a puddle last night...

Option 4 seems to present less risk.

 

[ChrisKH]

My brother is an HBOS employee and he is holding onto his shares and options. He reckons in real terms that HBOS is well protected; moreso than any of the other High Street banks and that there is no chance they will go under before the other banks. As dom says these investments are a long term thing, but as bank go you could do worse than to invest with them.

 

[asterix]

Provided you can afford to lose the money I would go with ChrisKH. In 5 years or so there may be an awful lot of people wishing they'd bought at this moment. Or maybe not?

 

[rich p]

My brother is an HBOS employee and he is holding onto his shares and options. He reckons in real terms that HBOS is well protected; moreso than any of the other High Street banks and that there is no chance they will go under before the other banks. As dom says these investments are a long term thing, but as bank go you could do worse than to invest with them.

I'm no expert (clearly) but long term these days doesn't necessarily mean increases in value. I've had my few shares (like Arch) for a good few years and they're worth a quarter of what they were a year ago. It's not how long you hold them, it's whether you flog them when you think they've peaked. I was caught out by the latest crunch

 

[domtyler]

I'm no expert (clearly) but long term these days doesn't necessarily mean increases in value. I've had my few shares (like Arch) for a good few years and they're worth a quarter of what they were a year ago. It's not how long you hold them, it's whether you flog them when you think they've peaked. I was caught out by the latest crunch

What are they worth compared to ten years ago rich?

As has been said, look to the long term and you can ride out the peaks and troughs. As you get nearer retirement you should start moving most of your portfolio away from higher risk investment options like the equities market to reduce your risk.

 

[rich p]

10 years ago they were worth c £500 so twice as much as now! In theory you're right but the troughs are so low it can take too long a long time to get back to where you were and that's not allowing for inflation. I kept meaning to flog them but didn't actually need the money so I'll tough it out for another 10 years!
I still won't be buying any more though, The fnugging banks have lent my money to people who couldn't afford to pay it back, made £3-4 billion profits, and now want me to invest some more money with them

 

[andy_wrx]

Like they always say 'the value of shares can go down as well as up. Past performance is no guarantee of future returns'.

And taking share-buying off someone on the internet ??? Noooope !

However...

One way of looking at it is the shares are now over-sold, valued too low and so worth buying as they'll go up again.

But when ? It might take 5 years.

They might go still lower in the meantime.
And it is possible HBoS might even go bust, although they are no Northern Rock.

But for me personally, I think they're a better bet than the lottery and how many people throw their money into that !

 

[Arch]

So richp (and if you don't mind me asking) are you planning to sell the rights, or let it lapse and see what you get out of the shares?

I can see that long term (possibly very long term), it's probably worth doing the 'cash some in to pay for some' option, but as I've been wondering about whether to sell them all anyway (not a good time I know, so I'll hang on to them if I can), I don't know that I want more...

I suspect I might end up mithering so much that the lapsing option happens by default...