Market matters

Alpesh Patel, markets expert from Pathburner.com, answer your questions about shares.

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Mr Packer from Farnborough says: "The directors of Debenhams have twice recommended shareholders to vote for the acquisition of the company by a third party for first 425p and then 455p.

"However, the quoted price for Debenhams shares on the Stock Exchange is about 470p. Can you explain what is going on?"

Yes, they do seem keen to sell their company!

The reason the market price is higher than the bid price is because the market thinks there might be an even higher offer to come.

And if you think about it, if somebody's bidding for a company they're doing it because they think that by buying it they're going to get a higher return later anyway, so let's see if they're going to put more money on the table.

The risk is that, as a private investor, if you hold out that bid might not materialise.

They're talking with the takeover panel to see if there's a sealed bid process, possibly before Christmas. You might want to take some of your profits at 470p and wait to see what happens on the other side.

It's a question of a bird in the hand or two in the bush.

Yvonne Robinson from Lancashire writes: "I keep noticing that in the paper Monsoon are wanting to leave the Stock Exchange for an AIM listing.

"What effect, if any, will this have on the small investor? And also, will future dividends still be declared or not?"

The chaiman of Monsoon now owns more than 75% of the company, so they are forced to get off the main Stock Echange listing.

The danger is that on Aim, with smaller companies, the share price could be a bit more volatile, brokers don't cover it so much - you have to think why does he want to keep it on Aim?

Is he thinking about shareholders' interests or keeping it a family company?

Reading between the lines I think he's more concerned about keeping it a family company.

I'm not too confident about wanting to stay in a company where the main shareholder is not so much concerned about me but more about himself.

Mrs Briggs asks why is it that some shares are traded outside normal trading hours. Surely this gives an advantage to those in the know.

There is trading outside normal hours in the US markets

She might also have heard about something called CFDs, where people will give prices not on stocks but actually things which track the stocks.

As far as shares themselves are concerned, you can place an order outside of market hours but it's only filled when the market opens.

There's something called the grey market where you can make a price with a broker but that's not the shares you'd be trading but something off the shares.

Anyone can trade in the grey market if they've got the right stockbroker, because not all of them offer this. But it can be more volatile.

And a related question from Chris Ragett of Orpington: He says: "The stock market opens at 08:00, but a number of companies, like ABF, do not start trading till much later. Why?" When the market is opening, the big institutions are still trying to find the price and work out if they want to buy or sell.

Because that takes some time the actual trading might not start fully until later on.

You don't want to be trading right at the beginning because prices can be volatile. Private investors will on the whole get a better price waiting until after 0900.

Mo Hamilton from Essex understands that some shares come with "perks"? Can you give some examples and explain why this is the case?

It tends to be the retail stocks, such as Debenhams and Marks & Spencer, which give gift vouchers and the like.

Companies like ICI and British Aerospace tend not to.

The reason they do it is because it's an added incentive to own their shares.

But it's not a good reason to buy the stock because you could lose far more on the share price than you could gain on the perk.

Mr Pitcher from Staffordshire asks: "Can you briefly explain company yield."

It's the amount of the dividend you get divided by the share price.

If I'm buying £100 of stock, how much return am I getting just from the dividend?

You might be getting £4 for every £100 of stock in which case it's a 4% dividend yield.

Martin Williams of Lancashire has two questions. Has a final dividend that has been declared in the company accounts ever been voted against at an AGM, and why are shares quoted in fractions of a penny when fractions of a penny are not legal tender?

It's a rare thing for an AGM to vote against the dividend.

The thing is that directors don't like revolting shareholders and shareholders tend not to revolt.

Everthing tends to get passed through - the directors say we want to give this dividend and the shareholders all say yes.

You're not going to be asked for a quarter of a penny. It will be rounded up and my bet is that it won't be in the private investor's favour. You're probably going to lose half a penny.

Kathleen Castle has dealt in shares for some years, and usually receives her share certificates about a month after a deal - is there any way of getting them sooner?

Open a nominee account with your stockbroker.

It will be paperless, you don't need to worry about the certificate, you'll be able to trade a lot quicker and the broker will take care of all the paperwork.

The only downside sometimes is that you are not eligible for perks

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The opinions expressed are Alpesh's, not the programme's. The answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.