National Grid Share Discussion Threads

[natasonline] 27/5/2024 11:52

@UtyNVWindfall taxes are more like when Oil Prices spike and Big Oil companies receive a tsunami of cash. That won't happen with NG, If NG received a tsunami of cash due to the wind being really strong then they wouldn't need our injection of capital. The pressure on consumer income will be slow and fraught over. Hopefully inflation will just do it's thing and we will rise with the tide. Imagine if, after all this Labour still campaign on Nationalisation and we receive another kick in the balls in a few months?

[utyinv] 27/5/2024 11:24

Pierre,

You are right, I am trying to keep things simple. As I said, in previous post it will take many years for the prospective promise of a Company valued at £100 billion to come to fruition. So to cover the lost income from new cash invested to take up the rights will make a break even more longer than the 20 years I refer to in my previous post.

The prudent investor is being punished to serve a Socialist ideal.

In Natsonline’s post 9176 :- I've effectively lent 8.5K to NG (I'm a banker now)
- I will not see a return on that 8.5K for years to come, the infrastructure it's building to make me a return hasn't been built yet.
- We as wealthy investors provide the up front capital, the general public pay us back in monthly installments.


My take on that is, well that’s all well and done if justice is carried out in the future, but, ‘IF’ and when NG does raise bills to compensate their investor’s pain, will the Left Wingers in the Labour Party force Starmer to say that the profits are unreasonable, when people are struggling, and impose a windfall tax on shareholders returns? If anyone stands up and says “ hold on we have invested our money and we require a return”, I wouldn’t put it beyond Labour to say ‘Tough’ this is our form of a ‘redistribution of wealth’. The bottom line is, can we trust NG to deliver but more so, can we trust Labour to play fair with investors?

[pierre oreilly] 27/5/2024 11:16

Nat, Ng. doesn't have much say in the return it makes - the regulator decides on the percentage uplift to traded electricity prices (I know nothing of the gas situation).

Which has worked fine up to now, with a good balance of profits with customer bills imv. It's a critical service being viewed as central to the UK's defence, as well as an essential service to everyone. The regulator allows certain costs to be passed on immediately to consumers - the industry deregulation (that's a laugh!) for example, and that went on until about 2000, so about 23 years of costs passed on as they were incurred (firstly by the cegb and latterly by ng.)

Which begs the question Why aren't net zero costs passed on as incurred? (i.e. this 70b quid spend). If ng. spent 1b in year one, then pass one bill onto consumer bills for that year. That would save the working capital requirements to be something like 1.5b instead of 70b.

I have my views on this. Can anyone else offer a reason for this?

[pierre oreilly] 27/5/2024 10:50

lippy, I'm younger than you and I think I've been put in the oven, roasted and eaten already.

As we all (i.e.everyone in the uk) will be whatever our circumstances as net zero makes its presence felt.

Uty - you say we can get the same divi if we take up all our rights - which is true but a tad misleading as far as income is concerned because we lose the income on the cost of the rights, so there's a definite loss of income overall.

[natasonline] 27/5/2024 10:50

Here's my take:- I'm taking up my full rights, 8.5K new money invested.- investing that 8.5K is keeping my income from NG level pre announcement- In this moment I'm worse off than a week ago- NG share price has to rise to near 11.0 to make me square, I think 9.0 will be it's base level based on a 5 percent div income. - I've effectively lent 8.5K to NG (I'm a banker now)- I will not see a return on that 8.5K for years to come, the infrastructure it's building to make me a return hasn't been built yet.- We as wealthy investors provide the up front capital, the general public pay us back in monthly installments.Will National Grid be able to raise consumer prices without public pressure or heat from government in a short enough time frame to make this a worthwhile value investment? Time will tell.Personally if I could go back a week I'd sell in an instance, walk away and invest my money in to a less capital needy business with less unknowns. The last time NG did a Rights issue was 2010, now this one in 2024, next time 2030? Get saving boys. As I stated in an earlier post the good News is, last time they did a rights issue in 2010 NG stock price went on a massive bull run 100 percent gain. Will history repeat itself? I hope so, because at the moment I'm not happy about selling good stock to fund this Green clunky mess. I'd be a lot more confident if this was connecting Nuclear Reactors to the Network and not a bunch of nonsense bird-killing Windmills .

[lippy4] 27/5/2024 10:41

as already stated if you are young enough to wait for this to come good as an investment, maybe???

as an older investor in my late seventies i feel i have been stuffed ready for the oven..i think you are having to put more money in for the same return..

[pierre oreilly] 27/5/2024 10:28

It's important to realise the time delay before these new pilons/interconnectors start to increase profits. The return is on the value of the infrastructure, so things have to be built and then accepted by the regulator as infrastructure. Not sure exactly when the first pylon will be determined to be part of the infrastucture (anyone know?). The customer then pays for it from then on (for forty years till it's written off afaiui). That situation doesn't fit confortably with me - although as a shareholder eventually I'll get a return on this 70 bill, many poorer (or even averagely wealthy) customers end up in fuel poverty. Of course all this relies on the regulatory framework being as it is today. Fat chance of that imv when looking at a 6/7/8 year timescale, especially when, even without this 70b spend, there'll be many more driven into fuel poverty from other increased costs.

So roll forward 7 years, many in fuel poverty, and then they're asked to pay an extra increase on their bill to compensate ng. for a 70b investment largely already made, hence increasing profits pretty rapidly from that point by driving many more into dire financial circumstances. I doubt that will wash at that time.

Please don't belive Pettigrew when he says this will eventually drive down bills. What he means is if we persist with windmill expansion without 70m spent, bills will be higher than they would be without this 'investment' (because windmills cause the grid massive problems which if not addressed at very great expense would result in even higher bills. (And remember the 20 year life of windmills means that many operating today will be decommissioned by the time this investment is completed, so there's the rolling cost of replacement of windmills to be borne by customers on top of everything else).

Under current plans, bills in 7/8/9 years will be far higher than if we had a grid with little or no intermittent energy (means these days more nukes) - that is why Pettigrew is lying on bills. And we'll need more nukes anyhow even after this infrastructure spend because the capacity market will ensure that max demand can be met almost always with purely instructable capacity.

It's simply cruel. Self inflicted lowered standard of living for everyone for purely political reasons, not practical ones.

Investment wise, if you believe things will be as smooth as pettigrew says (we'll borrow 60b, the customer pays back ng. for the investments in future years, 6000 pylons will be built with no planning or wayleave problems and all forecasts are correct) then very long term, ng. will do ok). If you don't believe all that, then it's a different matter.

[anhar] 27/5/2024 09:57

As others say, individuals will all look at this differently. I've been investing long term for income for several decades and decided that NG. did not merit new money by subscribing for the rights. Any new money I add to the port. has to compete with the existing shares in it or possibly a new holding and NG. is not the lead candidate, for me.

I was though willing to run some version of a break-even trade regarding the rights, recycling any proceeds back into the company but not requiring any new cash. Since divis are my primary objective, I did what I mentioned above. But that's just me, others will have their own views depending on their investment strategy, availability of cash, views on NG.'s merits generally etc.

[bountyhunter] 27/5/2024 09:30

Edit - UtyINV you are probably the most knowledgeable person here on NG. Thanks for your level headed views over the years on this BB (by the way I read your post after making this one).

Some very good points which I agree with (edit - last five posts! :). The only thing I would add is the political risk going forwards, possibly mitigated by the new NG NZ investment plans, however Rachel Reeves may not have NG shareholders in mind when she makes policy decisions. She doesn't seem to acknowledge that energy prices have dropped back significantly and may be determined to make her mark on things to the detrimental of shareholders going forwards?



It's really difficult to know where to invest nowadays with the prospect of a Labour government now almost a reality.

PS as stated I sold last Thursday @1025 average so I may come across as rather negative but this rights issue has certainly not been good for shareholders short term as evidenced by the market reaction. I may reinvest if/when the time seems right.

[utyinv] 27/5/2024 09:24

Albajack, post 2157 :- The advantage for those of us who have not sold is that there is no need to try to time a way back in. And by taking up rights in full we suffer no cut in total dividend received.

What you might not be getting is something that Bounty has eloquently put it, we all have different situations.

Two scenarios that need to be taken into account especially when referring to options that people like Bounty are trying to evaluate.

1) many on this Board have had investments for the past 30 years ( NG floated in 1995 ). Over the years, using the old PEP system which was replaced by the ISA, investors have bed and breakfast’d shares to make them tax efficient. So much so, that many have shares that would require far more capital to be raised in the ISA than the annual allowance permits.
2) many investors on this bb have been proactive investors in having a wide range of stock and funds within the tax shelter, using stock from UK, USA (W-8BEN req) etc.

So that is why there are so many permutations that the likes of say Bounty are evaluating. Bounty is the administrator of this bb and as such it is not wrong to assume that Bounty is knowledgable about investing. Bounty and Pierre have been investing for many years

One simple calculation I did for a friend was that to fork out the Capital to effectively break even on dividends would require a lot of faith in the money raised by NG being used wisely and quickly enough to realise a benefit.

My friend did not take up the option and as a result the loss in income from dividends as apposed to the outlay in new capital would take 20 years to break even and he is already in his 70’s. So for him that might be the right thing to do. None of us have crystal balls.

Yes he could do a part ‘take-up’;, ie, selling some shares inside an ISA to raise capital to buy some or all the rights but the essence is we cannot say what is the right thing to do because we all have different circumstances.

I have faith in the outcome, due to many reasons, but others might not have time on their side.

[viscount1] 27/5/2024 09:20

NG may well be undervalued at this point but technically I doubt the share price will recover much until after the xd.

People selling off their NGPNs will keep the pressure on the NG share price, and new money that might go in is being used to take up the rights.

[davius] 27/5/2024 09:12

My calculations show the fall Friday was a little higher than would be expected than by the right issue alone, by about 30p (at the close). The fall the prior day was a reaction to the announcement of the rights issue.

I think the investment case now is more compelling, the share price damage has (in the most part) been done, and the £7bn cash injection should enabled the company to expedite the connection of the large backlog of green energy generation projects, which will lead to increased revenue for NG.

[1carus] 27/5/2024 09:01

There seems to be a few ways to look at this in terms if the new value of the shares compared to the old value. I Dont have a position. But the share do look a little light compared to the numbers around 23 May. The rights issue has not been paid yet by those involved so the company does not currently have that cash asset as far as I can see. Is this why the price seems to be out by 100p as until done there are risks.

[anhar] 27/5/2024 08:50

Having taken the decision as a long term hold income investor to sell all my npr and reinvest the proceeds in NG. xr in order to catch the next divi, xd on 06/06, I can go to sleep since I have next to no interest in share price fluctuations and look forward to a growing income, admittedly from the cut level.

The forecast yield on the cut payout of around 5.0% remains acceptable to me. No guarantees but they don't have a bad record of divi growth over time.

A little sad that despite their fine record, they now have the dubious distinction of joining the big cap divi slashers club of recent times along with GSK and Vodafone.

[bountyhunter] 27/5/2024 08:34

Yes debt of that scale at the moment would be very costly, agreed. That's probably why they've taken the massive interest free loan from shareholders (with possible repayment over many years if you are in a position to wait that long).

[pander45] 27/5/2024 08:29

It might not take years, or it might. A company like this has to evolve otherwise it becomes a static entity for shareholders. They could have piled on the debt but that is equally treacherous and impactful.

[bountyhunter] 27/5/2024 08:22

As an income investor if you take up the rights you may then receive close to the same total dividend income as previously from your NG holding.
However it will have cost you 645p on a 7 for 24 basis (for shares which will not receive the final dividend) just to maintain the status quo, not a good deal however you look at it. Furthermore as previously discussed the capital value of original shares has dropped by significantly more than would be accounted for by the rights issue. Unfortunately however you look at this it's been a disaster for shareholders. Future growth may mitigate but that's yet to be seen and will take many years if not decades.

[pander45] 27/5/2024 08:16

There are, but one way not to look at it is to assume that there will not be significant growth is the value of the company in the future. I personally see this much more as an opportunity rather than a threat. I only invest what I can afford to sit on for however long I need to. This facilitates me with the most important aspect of investment. Patience.

[laurence llewelyn binliner] 27/5/2024 07:39

#Viscount1, thank for adding, I was not aware of that choice, mine will be staying inside the ISA, tax free dividends and CG are the best rewards.. :o)

[viscount1] 27/5/2024 07:37

You can take up the rights outside of an ISA even if the NG position is in an ISA.

[laurence llewelyn binliner] 27/5/2024 07:34

Each holders situation is different, but where possible the best way to recover the position (IMO) is to add the discounted rights at 645 pence and if you can add again to double your holding post XD to reduce your overall average price..

Holders inside an ISA have the problem of funding that strategy, which will could mean selling something to raise the capital before 06.06.2024 for the option, then funding the rest needed which is a PITA..

[bountyhunter] 27/5/2024 07:21

We are not all in the same position. There are many ways of looking at this.

[goldgeezer] 27/5/2024 06:25

Absolutely spot on. Also, ones holding is only diluted if the discounted options are not taken.

[albajack] 26/5/2024 23:21

@bountyhunter, what you said in #9151 was:

"Another way of attributing a value would be to multiply £11.26 (Wed close) by the rebased dividend per share divided by the current dividend per share, I've not tried that one but it may come out close to the figure we have posted, leaving the future yield roughly the same due to a lower share price?"

And the answer to that question was that you are calculating a future lower share price (x) by dividing the future dividend (y) by the current percentage yield (z). So if you then divide the future dividend (y) by the resultant future lower share price (x), the answer you get is (z), i.e. the current percentage yield. Not roughly the same, but exactly the same.

x = y / z

=> z = y / x

You say you haven't tried it; give it a go.

If you are wanting to calculate the prevailing yield at some point in the future based upon a prevailing share price and expected dividend, and then compare to previous data in order to ascertain value and/or re-entry points, that is something different to your question.


The advantage for those of us who have not sold is that there is no need to try to time a way back in. And by taking up rights in full we suffer no cut in total dividend received.

A 645p per fully-paid rights and an adjusted future dividend of 45.3p is a 7% yield on the purchase. No transaction charges, no stamp duty. These two will also lower any re-entry price calculations, especially the latter.


Oh, and I am an income investor, both now an in the future...!