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I am new to stocks and shares.
What is the logic behind the price increasing today before a load of new shares appear? TIA
For avoidance of doubt i own Kier shares and maximised the Firm Placing.
When are the new shares due to market???
I think it's tomorrow
Chris, imo this shows great confidence in the company that people are prepared to buy at these prices and fully expect the price to rise higher after tomorrow admission of the new shares. The opening price tomorrow will be very interesting and there will be the evitable sellers trying to make a quick profit. Those shares (again imo) will be quickly absorbed by institutional investors. I think we may well see 150 before long. We may not also!
Chris, as per prospectus:
Admission and dealings in New Shares to commence 8.00 a.m. on 18 June 2021 on the London Stock Exchange
I expect we will have to wait a few minutes after 8am for Kier to open tomorrow.
If it goes up to 125 I'll be tempted to sell some of my original holding, just in case...
Private investors only own a small part of kier, approx 28% pre-equity raise and possibly 100m of the new combined total shares in issue. PIs are likely to be the main sellers imo and have possibly sold about 20% of their holding in KIE this week. The sellers are running out of shares. Many ppl see this share as a triple bagger. Kier is the market leader for regional construction, is on most suppler frameworks, is larger than most construction firms and one of its biggest competitors has been removed from the market (Carillion) and another is much diminished (Interserve). Those two failures have given the entire sector a mandate for slightly higher profits to avoid another collapse, at least for a few years. (Amey might be dragging Ferrovial into trouble tho). Forecast profits for KIE are 3.5% on £4bn-£4.5bn, which is £140m to £157m. Kier management has increased margin over the last three quarters so 3.5% seems achievable. A p/e of just 8 on £140m puts the shares over £2.50 and incidentally, would put the firm back into the ftse250 with index funds picking up the shares, adding more momentum to the shareprice. Newsflow is good for Kier; key dates are end of year 30 June, trading update soon after, full results published probably in July, annual report in September. First half profit was only £9m with the remaining covid costs and restructure exceptionals bringing it down, but a corner turned and the first profit in two years. If second half is as promised (anything over £40m) this will be a surprise to the market after two years of disappointments, but long-view investors can see it coming, hence the demand for the shares at 120p, even with the new shares becoming tradeable Friday. If Kier has found a long-term new investor for the 'firm placing' (120m shares) there will be little selling on Friday and likelihood is that all sales will be mopped up by long-termers.
btw, ftse 250 is reshuffled in first week of September.
Great post PantherPat and spot on… should be a 3x SP all day long … once 3.5% margin falls through following restructure!
PatherPat and djframboise, thank you very much,
PP thank you for such a detailed response
dj, i was thinking that was the case but i wanted other peoples opion incase im well out and there is something lurking i cant think of
PantherPat, I guess we're just speculating until it actually happens, but in my opinion with 284M new shares available to be traded tomorrow, comprising of about 60% of the market cap, and trading at a 70% premium on what they were bought for, equates to a fairly substantial number being traded for a quick buck. Sure, it might recover over the next few months / year(s), but don't expect the share price to hold up tomorrow.
twocents: We shall see. A couple of things tho. There seems to be something wrong with your caclulator - the shares were discounted to 85p and today's price is 121p, which is a 42% premium, not 71%. Also, you seem to have missed the point that I was making (one of them) - IF kier has found a long term investor for the firm placing (121m shares) they will not be selling tomorrow. The other major holders have been holding since £7, so they don't necessarily have an incentive to sell yet. The PIs are the likely sellers, and they may have mostly sold now. May have. They are a small group and account for about 70m of the new shares and have been selling for a fortnight. A relevant question is, who is buying? What about the rest of the investment community which didn't own Kier cos it looked like it might go bust? Now Kier's future is safe, they are interested buyers. Jupiter asset management just picked up 10m shares on the open market. This week. So yes, some PIs might still sell their shares cheap, but there might be a lot of buyers. I am not telling people what to expect. But if the price doesn't drop, I've given a few reasons. Since you've told me to not expect the price to hold up, I expect you to eat humble pie if it does. ?? GLA and DYOR.
One other thing - where are the shorters? Only Blackrock has opened a short, badly timed about 10 days ago from memory, and they've added to it twice, so now they have about 0.92% short and they are about 5% underwater already. Hedge funds have stayed away. Take a look at the price action on De La Rue when their shares went live. The shareprice spiked. It had already spiked once (massive almost four times intraday) on a good news announcement, but it spiked again smaller when the new shares became tradeable. If there are big buyers and PI shorters it could happen here too. There've been plenty of ppl on these message boards trying to get ppl to sell their shares, most likely because they are short. So far it hasn't worked. If there are shorts out there, they might be about to get burned. Maybe. DYOR.
We know who the 121m placing shares went to. It is published with the prospectus. Some were already invested and, in my view, would have sold their existing shares rather than wait until tomorrow. If they were selling at all.
Tomorrow will be interesting and an education. I have no idea what to expect but I will have to make my mind up on what to do at the time. My account at the moment shows that I will have my full application amount. Which is quite few. I have already sold my previous holding. As have many I guess.
PantherPat, Yeah I stuffed up that calculation. My calculation was the placement value relative to the existing price (well, the price on your post), so 85p ÷ 121.8p = 71%.
Not long to wait now. Have you got your humble pie at the ready also??
isn't 85p to 121p a 41% increase not 71%?
pretty much yes, 42.35%
How's that humble pie tasting twocents? Price holding up well so far and very interesting price action yesterday. A couple of million traded until the final couple of hours and then suddenly some big orders filled and the day's volume doubled in an hour. I'd say the MMs were patiently sucking up PI sales until they could fill those orders until in the final hour they grabbed what they could in a hurry to complete the orders and had to give higher prices. 15 trading days until the full-year trading update (13th July) and a transformed balance sheet. My guess for the 14th July: £2. All those 'happy bunnies' who sold yesterday for 114 will be rueful bunnies. I also hear there are a load of PIs trying to short. They will be burnt bunnies. Mid September when Kier is back in the FTSE250: £3.
Happy with little profit looking for more upside
No fireworks post the open offer but looking very positive imo. Despite plenty of pi's taking their quick profits, the ii's buying to hold have mopped up the available stock. Not sure I agree with Pat's timelines but I do agree that the only way is up. Not selling a bean short of 150 personally and plan to hold the bulk long-term.
No need for fireworks - they just cause people to be greedy or stupid or both.
Look at Share price from Monday open (when most PIs could realistically start to sell new holdings) a gentle drift upwards from 112 to today's 118 ish. That's in a period when price was widely expected to drop as PIs took short term gains on their 85p shares. As PP says, bigger buyers think it's a good deal at this price.
I'm happy if we drift around here until selling PIs are all out and then we can move upwards on any good news - hopefully 13th July.
PantherPat, Well it's currently over 4% down since before the new shares went live, so I'm not sure that I should be the one eating humble pie?
Amazing how some people will pick a fight in an empty room.
I agree, the price is still affected by early profit taking.
I'm hanging on for now but may sell some of the "new ones" mid July to restore portfolio balance.
twocents, I really think you should get that humble pie down your neck before it becomes inedibly stale. You seemed very certain that I would be wrong about the price and that it wouldn't hold, but here we are a week later and about to break-out to a new high. As I think everyone can see, some big buyers are sucking up anything that weak hands will give them before the trading update in just less than 3 weeks time. PI shorters will be getting very nervous as will the Blackrock staffer who put a 1% short on Kier three weeks back. It's slipped under the radar when the new shares made it 0.3% but my guess is that it's still there. Breakout next week if not this afternoon imo. GLA DYOR.