This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Vodafone deal details now available, and most are pleased

Vodafone have now published the details of the deal to sell their stake in Verizon. I won’t repeat the details here but most investors seem pleased with it. That includes ShareSoc director Stan Grierson who got a few seconds on BBC News explaining how we will now be able to afford more space on airlines for his long legs – you can see a more useful and longer video interview here: www.bbc.co.uk/news/business-23936013

Although the deal is being applauded as a major cash injection to the UK economy, in reality it might simply mean shareholders like Stan, and even institutions, moving to reinvest the cash in other stock market stocks rather than spend the money, i.e. it might simply lead to asset inflation. Perhaps today’s general rise in the UK market was simply anticipating this phenomenon.

One aspect glossed over in the announcement was the prospective share consolidation. These tend to be complex and one thing we will need to keep an eye out for is the question of whether managements LTIPs and share options are adjusted accordingly.

For private shareholders they might be concerned about being issued with Verizon shares but there will be a dealing facility put in place to assist with that problem. At least there was no mention of share buybacks in the announcement.

Oddly enough I have never personally been a big holder of Vodafone. One of my big early mistakes in investing was trusting a well known private bank to handle part of my financial affairs. They purchased Vodafone at 275p in 1999 and sold at 141p in 2001. They were soon after fired, and that was not their biggest mistake. As ShareSoc keeps telling people, you are usually better off looking after your own share portfolio, because your mistakes won’t be any worse than the professionals and with a modicum of wisdom and experience you can do a lot better. I bought Vodafone back subsequently in 2008, but with the latest announcement I have at least recovered the past losses.

Roger Lawson

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