Off-Topic Royal Mail shares?

Discussion in 'Off-Topic Chat' started by Chunkylover53, Monday 7th Oct, 2013.

  1. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Anybody here declared their interest in buying Royal Mail shares?
     
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  2. Ichiban Founder Staff Team

    England CJ Leeds
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  3. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    It certainly looks tempting seeing as the firm seems to be undervalued by the govt, it seems certain that the price will rise to be honest. Even if it's just a quick pump and dump it will still be lucrative to the nimble investor. I'm in half a mind to put the majority of my student loan into it, been mulling over it since last night but I know I will have to sell before my rent is due by the end of the year.
     
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  4. Robbie Valued Contributor ★ ★ ★ ☆ ☆

    Robert Lancashire
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    Although it might look tempting there will be a lot of investors who are not in for the long term thinking the same thing. If the shares increase the carpetbaggers will sell, taking a profit, then the shares slide. This can happen even after you try to sell, unless you get an agreed price. This is not always possible as it is usually a "best price." Lots can happen in between - workers go on strike - and the share price plummets.

    There will probably be a lot of day traders looking to make a killing who are quite savvy, and you could lose heavily. It seems that the shares are oversubscribed so you won't get more than the minimum number. If you do decide to "invest", do it for the long term and there should be a profit. Rumour has it that FedEx will try to take over, and the share price should rise.
     
  5. Doc Expert Advisor ★ ★ ★ ★ ★

    Matt Peterborough
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    They're not worth it in my opinion. You're not going to get the big hike in price once they're floated as there was with the gas and telecom shares. They were deliberately discounted below their true market value so everyone who subscribed made a profit when they were floated which in turn won votes for the government. These royal mail shares are being valued at market rate so when the price for the shares is decided, if the valuers do their job properly, they will float on the market at the same price. Therefore there will be no huge increase in price and no instant killing. Be warned!

    Also the royal mail shares are only in relation to the delivery side (Parcelforce) of the royal mail not the post offices themselves. This sector of the company has seen a huge decline in recent years. 2 years ago it was making a loss because nobody sends letters any more it's all done electronically. And Royal mail has severely lost ground to it's competitors in the parcel delivery sector with the rise of internet purchases. It's competing against UPS, Fedex, TNT, UKmail, DPD and Citylink. It has made a big effort to gain ground on this which is why, and only why the Royal mail is now making a profit and it's market share is 32%. So will Fedex try to but out a company which has a larger share of the market than itself, unlikely! I'm sure if you went on 10 different websites you'd find 10 different rumours of companies who might buy them out. So I certainly wouldn't buy shares pinning my hopes on this happening. There's no guarantee rumours of a takeover will make the share price rise if the shares are already overvalued. Also a failed buy out could make the share price plummet.

    What you also need to remember is the Royal mail is heavily unionised (CWU). This same union has resisted being modernised, because it would have resulted in job losses, which ultimately resulted in the company becoming unprofitable 2 years ago as just mentioned. The union is also currently looking at a new round of strikes as it doesn't want to be privatised because of salary and pension cuts. Can you see these issues suddenly disappearing once the shares are floated? And every strike hits profits, reputation and future business. All sounds like what happened with the mines doesn't it?! Would this same union allow themselves to be bought out by a private company and have their their power dissolved? Of course it wouldn't, it would resist very step of the way.

    Customer loyalty is also very fickle, businesses (who account for the large majority of parcel deliveries) go for the cheapest delivery firm and have very little, if any, brand loyalty. Plus in terms of letter deliveries it's also worth remembering businesses don't pay 50p for a stamp like joe public does, they buy them in bulk at a heavy discount.

    Royal mail is profitable, at the minute, but with strong competition and unions who will strike at everything this could all very easily change. I'll be investing my money in other shares. There are other companies who are expected to make the same (6.5%) if not higher returns and they have a more stable business model.

    In dragon den style - I'm Out!
     
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  6. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Well despite all your posts putting me off I have gone ahead and bought as many shares as possible for a quick pump and dump. Also Doc I fully understand and agree with a lot of what you have said but I plan on capitalising on the first day clamour to gain more shares. I never expected the almighty 4.50 to be reached but I'm hoping for a more reasonable 3.80. That would easily leave me with a tidy profit and a lot more money than somebody working part time at Tesco's. Obviously I can lose but so far I have been doing good with share dealing, it paid for my insurance in the first place haha, hopefully this round will pay for next years. If the price does fall I do have an exit strategy although it includes going out less which probably means I'll get a first in my degree.

    Anyway I digress, I'm still certain that I will see some sort of temporary increase in price which is hopefully substantial enough to make my effort worth it. Plus I might be scaled down to £750 after reading the news today which will make this whole thing utterly pointless (unless the price goes down).
     
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  7. Doc Expert Advisor ★ ★ ★ ★ ★

    Matt Peterborough
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    The Royal mail prospectus states the shares are due to be floated somewhere between £2.60 and £3.30 which will give a market valuation of £2.6 - £3.3 bn respectively. So aim for the middle price around £3.00. Adding potentially £0.5 bn on the top price to reach £3.8 bn seems a little of a stretch to me. I think the big deciding factor in the price will be if they make it into the FTSE 100 which will mean tracker funds will buy them and raise the price.

    I've made a lot and lost some of it as well share dealing, so good luck with your purchase I hope it pays for your insurance next year.
     
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  8. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Cheers mate, personally I'm expecting the upper price to be used but I also expect to be limited to a lot less than I asked for seeing as the scheme was 7 times oversubscribed according to Vince Cable which is better than the 22 times the Telegraph reported yesterday.
     
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  9. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Well firstly I'm a bit annoyed that I will only get 750 pounds worth, on the plus side, so far at least, the increase in price should cover around 80% of next years insurance. Would've been over 350% if they had given me what I had asked for though :Sobbing:
     
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  10. Doc Expert Advisor ★ ★ ★ ★ ★

    Matt Peterborough
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    Tbh limiting private investments to £750 worth of shares just doesn't make the potential couple of hundred quid profit seem worth it for me, I would have wanted a lot more shares than that if I had bothered. Apparently if you subscribed for more than the £750 worth you got nothing at all.

    Private shares were over subscribed by 7 times and commercial shares for investment companies were over subscribed by 22 times. It will be interesting to see where the share price ends up in 3 - 6 months when all the frenzy from the listing settles down so we can get a true picture of if they were undervalued or not.
     
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  11. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    If you asked for over 10k you got nothing. Everyone under 10k got 750 pounds. As a student I'm never gonna decline a few hundred but I was so certain the price would rocket initially which is why I put my whole student loan on it. At least it's a profit :Smile:
     
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  12. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Quick update, and a question.
    Well we all know how much RM shares are worth these days, good buy. Since then I bought into the Merlin IPO which has also increased by 40/50p so that went well. Now I'm looking at Pets At Home - it seems like an excellent buy at the price they are pitching at but I have no idea if they have any formidable competition in the UK. I know you can get food at the local shop etc but what about more bespoke stuff for your pets, is Pets At Home like ToysRUS for pets? Can any pet owners help me out with this?
     
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  13. DeviateDefiant Co-Founder Staff Team

    United Kingdom Leo Northants
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    I'd say Pets at Home wouldn't be a good investment, solely because online retailers are cutting so much into the market. Amazon has been pushing hard on the scheduled deliveries for pet food, recently had discount codes on hundreds of items too.

    I know that's not much to go on, but as a pet owner the best economy comes from getting a 15KG sacks every 2-3 weeks. For most people who go out and grab massive sacks, free next day delivery at home is more appealing than driving to a brick and mortar store and paying over the odds then lugging that sack back.

    To be frank, there's almost no retail outlet I'd invest in. Pets at Home is probably one of the safer ones as you don't tend to buy guinea pigs from the net :Laughing:
     
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  14. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    I completely forgot about Amazon's foray into the pet market but I was more interested in the goods with higher margins such as chew toys and all those other stuff like toys, leashes. Basically try before you buy sorta things, and like you said buying live pets. Plus I'd assume its the only store one may go to if a fish tank pump etc were to break because margins on those are ridiculous plus you'll need the item the same day/next which online retailers aren't gonna match. Do you know of any equivalent brick and mortar stores that are direct competitors?

    P.S: As you can see I know almost nothing about pets, I was basing my buy strategy based on their past year financials

    EDIT: What about medicine, are they the only brick and mortar suppliers of over the counter pet drugs if such a thing exists?
     
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  15. DeviateDefiant Co-Founder Staff Team

    United Kingdom Leo Northants
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    Well, incidentally we have a fish tank built into the living room wall. Our pump broke last year and I ended up trying out to a specialist place, didn't even think of Pets at Home :Innocent:

    Competition would mainly be Wilkinsons, Poundland, Home Bargains and whatever local stores there are. We get most of our dog toys from Poundland as they go through them so quick. Generally don't touch Pets at Home because of the prices. Our Amazon Prime account gets us what we need next day, ordered at 7pm and had things at my door 9am the following day a few times. Several retailers now offer same day in big cities, then of course ASDA/Tesco/Ocado/Iceland etc. all offer home delivery of most pet supplies.

    I personally wouldn't touch stock in a high street retailer, that's just me. I'd be looking at the supply chain for consumer devices that are in demand and investing in those. Foxconn assemble most Apple devices, Sharp/LG supplies a lot of tablet/mobile screens, Samsung provide chips for everyone under the sun etc. I'd also look into start-ups surrounding consumer privacy as it'll be a very successful market in the years to come. Crypto-currencies is another obvious one, but too many playing that game right now.
     
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  16. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    You've given me a lot to mull over now. Yes I agree high street shops days are numbered, however for the purposes of a max investment over a year it still looks good - quite a lot of older folk still don't trust the internet etc which eliminates them and many just prefer to buy from big marques for perceived safety of a big brand. Pump and dump possibility?

    Plus while we're on it I personally think tattoo removal start ups will be very big over the next few years and something I'm looking into pretty heavily. Cryptocurrencies are a weird one - with Mt Gox getting hacked etc it just seems too volatile. Plus selling cryptocurrencies isn't that easy either if criminal gangs use stolen bank info to buy them off you.

    Anyway thanks for your insight, its given me a bigger insight into this market, still think its gonna be a winner though :Tea:
     
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  17. DeviateDefiant Co-Founder Staff Team

    United Kingdom Leo Northants
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    I have a friend who's a Tattoo Removal Specialist and he's making a ton on it. I'd say that's a good market to invest in. I agree with crypto-currencies that it's too volatile, as I've said before I've been in the position a few times in the past of mulling over committing to a Bitcoin investment. Regardless of the fact that at the time I would have come up with massive profits, I can't see the scenario repeating itself as things are. I would however consider investing in stocks/shares for Bitcoin ATM companies.
     
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  18. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Quick update - decided against pets at home in the end and went for barclays + tesco, pretty glad I did by the looks of things but tesco could be a bad shout considering these so called price wars so I'll probably offload it later this week.
     
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    DeviateDefiant likes this.
  19. Doc Expert Advisor ★ ★ ★ ★ ★

    Matt Peterborough
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    Must admit I've been looking at Barclays shares again after their recent bad news. Their share price will always bounce back. Bought and sold them a few times over the years.
     
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  20. Chunkylover53 Expert Advisor ★ ★ ★ ★ ★

    Yeah I locked in at 240, wish I had waited longer but I didn't expect a bigger drop considering that it was already a 52wk low plus the issues really aren't that bad. I've told my dad to buy some as well at current price because it looks so tempting when coupled with a target price > 290
     
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