Was Royal Mail's IPO really too cheap?

Royal Mail's share price chart shows why it pays to use a trading system that's independent of politics. John C Burford explains.

Remember the political furor surrounding the Royal Mail float last year? The accusation was that the government's advisors had deliberately ensured the issue price was low (330p), so that they could clean up in the inevitable initial public offering (IPO) scramble.

In fact, on issue day, 11 October, shares made an historic rise of 48% to the 455p level. Predictably, Vince Cable, the UK business secretary, was hauled over the coals in a ritual grilling by MPs who accused Cable of robbing the UK taxpayer' of those gains.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.