Stocks and shares

[hi2u_uk]

I have some shares in a company and i have just noticed that they have doubled in value due to the company being taken over. Is selling the shares the only way i can actually get that increase in value in the form of cash in my bank account?? I dont really want to do that as it will mean that i wont have any more shares in the company

 

[najaB]

I have some shares in a company and i have just noticed that they have doubled in value due to the company being taken over. Is selling the shares the only way i can actually get that increase in value in the form of cash in my bank account?? I dont really want to do that as it will mean that i wont have any more shares in the company

Change the scenario and you'll have your answer: "I bought some sheep, and I've noticed that since the lambing season there are a lot of lambs. Is selling the sheep the only way I can get that increase in value in the form of cash in my bank account? I don't really want to do that because that would mean I don't have any sheep."

You can have the shares, or you can have the cash from selling them.

 

[Busaholic]

I have some shares in a company and i have just noticed that they have doubled in value due to the company being taken over. Is selling the shares the only way i can actually get that increase in value in the form of cash in my bank account?? I dont really want to do that as it will mean that i wont have any more shares in the company

You could always sell some and keep some, to have your cake and eat it.

 

[Mcr Warrior]

Not necessarily. If the company whose shares you presently hold has indeed been taken over, the acquiring party may be offering to (or be required to) buy out all the remaining minority shareholders, you'll then in due course receive payment and your old shareholding will be deemed cancelled.

Other scenarios are possible. Depends who the shares are in. You might get shares in the acquiring company instead. Or part new shares/part cash. All depends.

 

[najaB]

Not necessarily. If the company whose shares you presently hold has indeed been taken over, the acquiring party may be offering to (or be required to) buy out all the remaining minority shareholders, you'll then in due course receive payment and your old shareholding will be deemed cancelled.

At the end of the day, the only way to get cash into a bank account is to no longer own the (full amount of) shares.

 

[dakta]

Dabble in shares a bit and the way I try to rationalise it is you own a fragment of the company, and the price or value you see is just a reflection of what people are trading for them at the time, basically what the last few people paid - and it's quite often disconnected from the actual value of the firm more of a very generalised perception of it

so if the shares are currently selling at around twice what you paid, then if you sold now you'd likely realise that as a profit - but unless you do sell the shares then the share price is just a number, I try not to think of a share price as a valuation of my share unless i'm actually doing a trade.

So boils down to this, if you sold now, would you make a profit you're happy with? and do you want to risk this potential for a higher potential by sticking in a bit longer?

To realise anything though you're going to have to let them go as it's all just potentials until you do

 

[Mcr Warrior]

At the end of the day, the only way to get cash into a bank account is to no longer own the (full amount of) shares.

Essentially yes, although one type of capital restructuring might result in a shareholder receiving a larger than normal "special dividend" and although then left with seemingly the same number of shares, the shares would no longer be worth in total what they were before (but I don't think that this is what is happening here).

 

[bspahh]

At the end of the day, the only way to get cash into a bank account is to no longer own the (full amount of) shares.

Its not the only way.

The simple and cheap way is to own shares and keep them. You might get a dividend payment every so often.

With shares in a single company, there is a risk that the share price could up or down. You can change how much you are exposed to those risks. One way is to sell some of your shares. You could also buy more.

You can also use futures contracts, and spread betting to do the same thing. These are not simple, and might not be cheap. If you get your sums wrong, and you can lose lots of money. You can also use them to reduce the risk of big losses and gains.

For example, you could agree to sell your shares in 3 months time but only if they have doubled the current value again. You would be paid a little bit of money right now, which you would keep if the share price hasn't doubled by then. If the share price triples, then you sell your shares, but you have lost out the extra increase in value.

Doing this sort of thing doesn't make much sense if you've only got a small amount invested, as the transaction costs are likely to be more than the amounts that you would gain or lose. However, its a way to adjust your exposure to a risk - if you either need income right now, without selling the shares - or if you want to guarantee that you won't lose more than a certain amount.

Betting gets a bad name, and if you have an addictive personality, its worth avoiding altogether. Betting doesn't have to be bad though, in the same way that buying house insurance is like placing a bet with an insurance company that your house will burn down.

 

[najaB]

Its not the only way.

Very long post. The TL;DR version of which: dividends (which will get @hi2u_uk a tiny fraction of the increased value, at some date in the future) or sell (some of) the shares.

 

[hi2u_uk]

You could always sell some and keep some, to have your cake and eat it.

Im new to the whole share buying thing, what i have realised is that i have a very low number of shares i,e, in this case i only have 25 shares in the company. I only have just over £2000 in total in shares across several companies as i was nervous about doing the whole stock market investing. I guess i could still sell half the shares in this company but if the price remains this high then id not be able to buy the same number of shares again

Not necessarily. If the company whose shares you presently hold has indeed been taken over, the acquiring party may be offering to (or be required to) buy out all the remaining minority shareholders, you'll then in due course receive payment and your old shareholding will be deemed cancelled.

Other scenarios are possible. Depends who the shares are in. You might get shares in the acquiring company instead. Or part new shares/part cash. All depends.

I had read that this is possible but how do i find out if this will happen ? what is the likely timescale ? I think the take over was confirmed end of Feb

At the end of the day, the only way to get cash into a bank account is to no longer own the (full amount of) shares.

This is the impression i am getting

Dabble in shares a bit and the way I try to rationalise it is you own a fragment of the company, and the price or value you see is just a reflection of what people are trading for them at the time, basically what the last few people paid - and it's quite often disconnected from the actual value of the firm more of a very generalised perception of it

so if the shares are currently selling at around twice what you paid, then if you sold now you'd likely realise that as a profit - but unless you do sell the shares then the share price is just a number, I try not to think of a share price as a valuation of my share unless i'm actually doing a trade.

So boils down to this, if you sold now, would you make a profit you're happy with? and do you want to risk this potential for a higher potential by sticking in a bit longer?

To realise anything though you're going to have to let them go as it's all just potentials until you do

I would be happy with the profit as i wasnt expecting this. I bought shares in a few companies during the early part of the covid pandemic as i was noticing and hearing that that a lot of share prices seemed very low and i didnt have much else to do. I dont know how shares were bought in the past but it was just a matter of downloading an app and then buying so it was easy. The plan was to sell them when they rose to pre covid levels but this plan just sounded too simple so i didnt buy lots of shares in case i was missing something. Fast forward to now and for some reason im having problems letting my shares go. This is one that is definitely above pre covid levels so i really should sell it but if i do then thats the end of the journey

 

[Mcr Warrior]

I had read that this is possible but how do i find out if this will happen ? what is the likely timescale ? I think the take over was confirmed end of Feb

Unlikely. By the way, what shares are/were you invested in? John Menzies plc, perhaps? If so, an enhanced takeover bid was, I believe, only confirmed by the board of John Menzies at the end of March, and you'll be receiving payment of 608p per share in due course (25 shares = £1520) and your existing shareholding will then be deemed cancelled. Don't think you'll have much choice in the matter as to whether to accept the deal or not.

 

[hi2u_uk]

Unlikely. By the way, what shares are/were you invested in? John Menzies plc, perhaps? If so, an enhanced takeover bid was, I believe, only confirmed by the board of John Menzies at the end of March, and you'll be receiving payment of 608p per share in due course (25 shares = £1520) and your existing shareholding will then be deemed cancelled. Don't think you'll have much choice in the matter as to whether to accept the deal or not.

yes its John Menzies, It sounds like i should do nothing and just wait then ? I bought the shares when they were around £2.50 so am more than happy to wait if im getting over £1500 back

 

[Mcr Warrior]

Assuming you are a registered shareholder, i.e. you are the named owner of the shares, you should receive relevant info from the company's registrars in Bristol (Computershare Investor Services plc) in the near future.

Might not automatically be the case if you didn't have an actual share certificate and your John Menzies plc shares were held electronically, somewhere else.

In the meantime, you could always sell up now, but the price you'll receive will undoubtedly be a few pence less than £6.08, maybe just under £6.00 per share, and you'll also get hit with some share dealing charges.

An outside possibility that the takeover deal, whilst accepted / recommended by the John Menzies plc board, still doesn't happen. What might happen then? Maybe the share price will drop away again. Or someone else will come in with a new bid. Who knows?!

 

[hi2u_uk]

Hmm interesting, i bought the shares via an app. I assume that i am the registered shareholder as the app has all my details . I dont have a paper share certificate , Its all electronic .

 

[Mcr Warrior]

Hmm interesting, i bought the shares via an app. I assume that i am the registered shareholder as the app has all my details . I dont have a paper share certificate , Its all electronic .

Your shareholding may well be registered in the name of an intermediate nominee company. You'll still be the beneficial owner of the shares.

P.S. Doubt you'll have received any cash dividends recently as John Menzies plc haven't paid one since 2019.