11th October 2013
Royal Mail shares are up 38% on the conditional market closing at 455p and had hit 459.75p at one stage. The list price is 330p. Currently 690,000 people who received £750 are sitting on a substantial profit. But many cannot sell until shares are fully listed on Tuesday, though those who bought through a broker can. Still more who applied by paper application at the Post Office cannot sell until much later in the month. A long wait while everyone else gets to buy and sell.
2) There were some 48m buyers for 1.2m sellers explaining the price pressure as the the Telegraph reports. The usually efficient Hargreaves Lansdown’s systems buckled under the pressure and it apologised swiftly. It may be a long weekend down in Bristol. Other brokers including T.D. Waterhouse made much of the fact their systems coped.
3) The Guardian devotes substantial coverage to political attacks mostly from the Labour Party and the left that the firm was priced too cheaply. At the current valuation, admittedly based on the more constricted conditional market, the Government might have got £600m more to put towards the deficit. The TUC general secretary Frances O’Grady has suggested the Government has been doing the equivalent of selling fivers for £4 quid. City sources say the sale might not have gotten away if priced substantially higher and say critics do not understand the book building process.
4) The Economist unsurprisingly gives a lot of reasons why the firm is better out of Government hands but surprisingly has reservations about the public listing. Private firms, it says, tend to invest more, and are better able to take on bolshie unions.
5) Sell or hold? We are in no position to give concrete advice. But assuming you can trade from Tuesday one choice is between taking profits perhaps of a few hundred – as many institutions may also do – compared with considering the long term prospects of the stock and an annual dividend of around £45.
And the verdict – take your pick – a poorly executed sale that denied small and many seasoned private investors a decent stake; a national asset sold on the cheap; a bubble of oversubscribed expectations; a smooth transfer to the private sector with widespread staff and public ownership helping Britain get back into the investing habit; or just another listed stock to compare with all the rest but not a bad income stock for the medium term. Maybe it’s a bit too early to tell, but that £10,000 cut off seems rather bit harsh.