Waiting with the Woolwich

By THIS IS MONEY
Updated:

 

I have 450 ordinary Woolwich shares that I want to sell for cash. Should I do it now or will I get a better deal by waiting for the Barclays offer? JF, Glasgow.

Jeremy Batstone, analyst with NatWest Stockbrokers, says: If your Woolwich shares came free as a windfall all your profits on a sale could be subject to capital gains tax (CGT) if you have already used up all your CGT allowance this tax year (£7,200).

If so, consider hanging on, as the part share-part cash deal offered by Barclays is designed to reduce your CGT liability. If CGT is not a problem consider selling.

You have to decide between the certainty of the Barclays offer in three month's time or the less certain value of the potential return and a reinvestment between now and the cheque arriving. Do not forget to factor in broking charges on the one side and the value of Barclays shares on the other.

Any stockbroker would urge reinvestment because there are other share investments that could be expected to produce better performance than Woolwich. It has been trading at below its demutualisation price for a long time - it is only the Barclays bid that has pushed the price back up again. But as well as returns, you have to ask if you want to invest in the stock market or not?

The rollercoaster of Woolwich shares may have scared you away from the stockmarket off in which case hold on for the Barclays offer because at least you will have the certainty of the cheque to come (you will still end up with some Barclays shares, of course but you can sell those).

We expect the market to rise in the fourth quarter of this year if not before, so Barclays shares could be worth more then than now.

On the other hand if you want to stay in the market but Woolwich are the only stock you have, consider selling now and buying an Investment trust because that way you get an instant spread of stock market investments which is less risky than one holding. If you already have a portfolio (or don't mind the risk) consider selling and reinvesting direct.

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