Private investors who want to sell relatively small parcels of shares in troubled split-caps can exp...
Private investors who want to sell relatively small parcels of shares in troubled split-caps can expect to receive prices about 30% lower than those quoted on the market.
Nigel Chapman, senior investment manager at Phillip Securities, said investors who are looking to move in excess of 10,000 shares in the troubled splits can expect a 30%-50% hit on the quoted price.
Chapman said those investors who have tried to sell reasonable tranches of shares in the split-cap sector have been hammered on the price as a result of the lack of liquidity in the highly geared splits of splits, which has resulted in spreads widening out anything up to 10%. By contrast, investment houses that run splits are able to transfer shares between each other at the quoted market price, a tool some believe keeps prices artificially high.
Nick Greenwood, head of investment trusts at Christows, said: 'If you own your own and do not know the buyer or seller of these shares, you have to go through a market maker to get the best price for you. The difference with the stock swaps of the big institutions is that the buyers and sellers know each other and so are able to avoid the use of market makers.'
Annabel Brodie-Smith, communications director at the AITC, said such share swaps are accepted market practice.
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