Friday, October 4

Royal Mail Shares Worth Buying?

Should I Buy Shares in the Royal Mail Share Offer?

Well, Questor from the Daily Telegraph says "Get in quick and buy Royal Mail shares ... act quickly to ensure you don't miss out on this income stock"

Questor is very well respected and generally knows what he's talking about, so who am I to argue? he also explains that "Demand for the shares is very strong. Orders from institutions filled the order book within three hours of opening. Retail investors ... have an allocation of 30pc of the float, but they should act quickly."

Here is a Questor video briefly explaining whether the Royal Mail offer is a good buy or not.

What will the share price be?

Originally it was stated that the price would be between 260p and 330p but in the last few hours it appears that the price will be at the upper end of that range, due to the strong demand.

There are unofficial rumours that they will start trading around 10 to 15% higher than the offer price.

Trading will being on Friday 11th October but bear in mind that as a retail investor you won't be able to sell any shares until the 15th October.

David Buik has apparently said on Twitter ‏@truemagic68 1h "Panmure getting great vibes that Royal Mail IPO will be heavily over-subscribed! 330p may be issue price. 375-380p possible early dealings"

Other comments :- Bookmakers in the Square Mile suggest shares in Royal Mail will soar on their debut.

Stockbroker Panmure Gordon has said - Its prognosis: depending on the float price the shares could be a raging 'buy'. "We believe Royal Mail Group represents an excellent investment opportunity", Gert Zonneveld, a Panmure research analyst.

"The indicative share price of 260p to 330p suggests an exceptionally good entry level for investors" The Times.

How many Royal Mail shares can you buy?

You can only apply for certain specified amounts: £750, £1,000, £1,500, £2,000, £2,500, £3,000, £4,000, £5,000, £6,000, £7,000, £8,000, £9,000, £10,000, £15,000, £20,000, £25,000, £30,000, £35,000, £40,000, £45,000, £50,000 and then £50,000 or above in £10,000 increments.

The number of shares you actually get will depend on demand, and as demand is expected to be strong it is very likely that your shares will be 'scaled back' so you will only get a percentage of what you applied for.

Why is the share price likely to rise?

Well, this is a big Tory moment, so they won't want it to fall flat - so their chums in the City should make sure it doesn't.

Also the Royal Mail carries parcels and with more and more people buying their stuff online, parcel shifting is a growing business.

Where should you buy them?

You can sign up for an account with brokers such as Hargreaves Lansdown or  iii (checkout the link in the margin or at the top) - personally I can't recommend TDWaterhouse or anything related to them (spit).

Hargreaves Lansdown will be open over the weekend exceptionally to deal with the Royal Mail offer. if your are using a broker you need to buy your shares by 8th October - alternatively you can use your legs and wander off to the Post Office for an application form.

All in all I will be getting a few and would get a few more if I had the available cash!