United thread 2012/13 (inc merged IPO thread)

[Braggster]

What is the point of price earnings ratio when they're not paying out ny dividends?

Earnings are not dividends. They refer to the company earnings (EBIDTA).

But typically those earnings would get shared with the shareholders.

P/E ratio can be a good guide to what return you'll get back from your investment.

Can't see much value in it if your not giving out dividends other than a good indication that the company isn't about to fall over.

You haven't read enough of Miller and Modigliani! Basically though, joking apart, the theory is that a company shouldn't pay dividends to the extent that it can invest each £1 of "dividend" to earn more than £1 in value (properly adjusted for risk, cost of capital and so forth). If it can't do so, it should distribute that money to its shareholders.

For example, Berkshire Hathaway - run by Warren Buffett - does not pay, and never has paid, a dividend, and that has been the correct decision because Buffett and his colleagues have been able to invest the money that they would otherwise have paid out at very high rates of return, so creating a more valuable business.

Having said that, the reason United won't be paying dividends isn't because they have fantastic internal investment opportunities; it's because their cash flows are too stretched.

 

[Prestwich_Blue]

Well they get the money whatever happens because the share issue has been underwritten. -Jefferies are the main underwriter.

That said if the offer is under subscribed it will force the future share price down from $16 a share which would be a huge problem for the Glazers. Why? Because a secondary objective of the IPO is to obtain a stock market valuation of the club - one that they can use to borrow against in the future.

So anyone thinking of buying to keep the Glazers in - DONT!

So are the underwriters legally bound to this now then? I thought they could still pull the plug at this stage, if there appeared to be zero interest. For some reason I had it in my head that they didn't have to make a final decision on whether to proceed until after the upcoming roadshows?

No they aren't legally bound yet and, as you say, will make a decision after the roadshow when they decide whether it's a goer or not.

 

[SWP's back]

What is the point of price earnings ratio when they're not paying out ny dividends?

Earnings are not dividends. They refer to the company earnings (EBIDTA).

But typically those earnings would get shared with the shareholders.

P/E ratio can be a good guide to what return you'll get back from your investment.

Can't see much value in it if your not giving out dividends other than a good indication that the company isn't about to fall over.

P/E ratios can show whether a company looks under or over valued against the earnings. Doesn't have to be anything to do with dividends.

 

[Football guy]

So even if ipo is undersuscribed , it will still raise the money they expect to raise as the underwriters will buy the remaining shares? Plz clear this for me

 

[Prestwich_Blue]

So even if ipo is undersuscribed , it will still raise the money they expect to raise as the underwriters will buy the remaining shares? Plz clear this for me

If it goes ahead, yes that's exactly what will happen. However the underwriters will gauge interest and certainly won't want to be stuck with a load of over-valued shares.

 

[Anonymous]

Fergie says he would have left United long ago if he was motivated by money.

I heard that two or three seasons ago he "did a Rooney" and threatened to retire unless he was paid a shit-load more money. He's a lying, hypocritical turd of a man and I see his "denial" that he's benefitting from the IPO doesn't actually deny he's one of the potential beneficiaries of that share scheme.

I think that man's socialist credentials can be best summed up with an old song:

"the working class can kiss my ass, I've got the foreman's job at last!"

 

[gordondaviesmoustache]

I heard that two or three seasons ago he "did a Rooney" and threatened to retire unless he was paid a shit-load more money. He's a lying, hypocritical turd of a man and I see his "denial" that he's benefitting from the IPO doesn't actually deny he's one of the potential beneficiaries of that share scheme.

I have said for quite some time that the reasons for Ferguson's continued and unqualified support of the Glazers can be more readily explained by factors that are less than apparent to the naked eye.

 

[Braggster]

I heard that two or three seasons ago he "did a Rooney" and threatened to retire unless he was paid a shit-load more money. He's a lying, hypocritical turd of a man and I see his "denial" that he's benefitting from the IPO doesn't actually deny he's one of the potential beneficiaries of that share scheme.

I have said for quite some time that the reasons for Ferguson's continued and unqualified support of the Glazers can be more readily explained by factors that are less than apparent to the naked eye.

The little whisper I heard was that he was that he gets a bonus based on player trading profits.

It's clear as day that he's been bought off by the Glazers.

 

[Football guy]

So even if ipo is undersuscribed , it will still raise the money they expect to raise as the underwriters will buy the remaining shares? Plz clear this for me

If it goes ahead, yes that's exactly what will happen. However the underwriters will gauge interest and certainly won't want to be stuck with a load of over-valued shares.

Thanks mate for clearing that up , so we might see share's if undersuscribed sold at prices around $14? I think that will be a major blow for glazers , i find it logically hard to understand who will buy shares at such price which certainly overvalues the club so much around £2b , however , asuming if shares are listed at whatever value glazer's seek but if its values fall to say $10 after sometime , will it have any effect ? Or it won't matter at what price shares are being traded in future?

 

[Prestwich_Blue]

So even if ipo is undersuscribed , it will still raise the money they expect to raise as the underwriters will buy the remaining shares? Plz clear this for me

If it goes ahead, yes that's exactly what will happen. However the underwriters will gauge interest and certainly won't want to be stuck with a load of over-valued shares.

Thanks mate for clearing that up , so we might see share's if undersuscribed sold at prices around $14? I think that will be a major blow for glazers , i find it logically hard to understand who will buy shares at such price which certainly overvalues the club so much around £2b , however , asuming if shares are listed at whatever value glazer's seek but if its values fall to say $10 after sometime , will it have any effect ? Or it won't matter at what price shares are being traded in future?

I'm not sure how it works with the underwriters getting a discount. But once the shares start trading, if they drop dramatically it has two impacts. The first is that it values the company a lot lower and the other is that it could stop any future placing.