We have all been through the heartbreak of being unable to sell our shares. The shock of hearing your broker say that “the main market is quiet right now” and it is simply too difficult to locate enough buyers, or having to re-subscribe to keep the stocks you currently hold. Here are the steps that you need to take in order to maximise the value of your shares.
Firstly, contact your broker. If you have an adviser, they are the best route to follow to sell your shares and for the minimum amount that you can.
You will need to check that your brokers have the most up-to-date information available, so firstly a “pricing model” is essential. This allows the broker to work out the amount of money that your shares are currently worth.
The broker may ask you to put in your existing values to give an idea of what it could be worth if you sell now. If your broker has already provided this information then it is their job to check the market to ensure that it is even.
You may also need to get your broker to confirm the price that it would take to sell these shares. You may need to seek independent advice to get a realistic valuation on these shares.
How to do this? Contact an independent professional to run a value. They will aim to cover every possible scenario, not just the one that they would like to happen. They will want to know, for example, how long will it take for your shares to adjust to the market price?
They will also try to help you put together a list of prospective buyers that would make you feel confident about the sale. You should get your broker to put together the contact details of these buyers.
Secondly, ask your broker for a valuation of your shares, which will also cover all the known effects of the market. This could include the various indices used by your broker in order to conduct their modelling exercise, so make sure that you ask your broker what the expected returns are for your specific stocks. For example, do they use the FTSE100, MSCI World, S&P 500, DJI Index etc?
What will it take to sell?
Make sure that your broker is aware of every fact that you have access to in order to get an exact value for your shares. For example, if you own shares in a specific company, the most accurate valuation will take account of the following: the market cap of the company; the dividend yield for each share, the growth that the company has had in the past 5 years; and what the company’s share price has been doing over the last year. If you own shares in a company that has recently had a positive statement then there is nothing more that can be done.
If you don’t have these key pieces of information in order, you may need to give your broker some information about your prospects.
If you are the owner of a company that has lost ground due to management, scandal or worse, you may want to list how you have lost the position and why. For example, can you show us that you now have a lower market cap, lower dividends or worse growth than the company? It is also possible to do this by submitting your report along with the valuation of your shares.
One of the main risks for shareholders is the possibility of re-subscribing to hold the same shares. Most brokerages have the ability to re-subscribe to a stock by placing a financial restriction on it. This can mean that you cannot re-subscribe if prices fall. This can reduce the value of your shares if you don’t realise that your losses have been reduced by this process.
You can contact your broker to see if this restriction is in place for any shares you hold in your portfolio. More mature stocks usually have a restriction of five days. The more recent an issue is, the longer your broker will have to re-subscribe to allow you to hold your shares. If you know that a particular issue has been due to be re-subscribed for a long time, then make sure that you don’t re-subscribe any time too soon.