the richest man in atherstone

Plusnet Stock Part I, Part II, Part III, Part VI, Part V

A short while ago BT announced that they wanted to buy Plusnet and subsequently made an offer of £2.10 per share.

A week or so after the announcement, I received a letter from my stockbroker asking me if I wanted to take the offer and I have accepted.

I have 200 shares, so I will get £420 from the transaction, which is about £80 less than it cost me to buy them. My first foray into the share-buying business has resulted in a loss of 16%.

I'm quite disappointed that I wasn't more successful, however the whole experience has taught me a lot about the stock market. I've learnt:

1. the technical jargon - terms such as market capitalisation, operating earnings, EPS, yield etc.
2. how corporate takeovers work
3. how to read annual reports
4. factors than can affect short-term share price fluctuations
5. how the share-buying process works

Additionally, I've started my project of analysing Warren Buffett's letter's to shareholders (a plethora of investing advice by arguable the greatest investor in the world), which should hopefully help me with my future investments.

I made a number of mistakes that led to my failure:

1. I didn't accurately value the company before buying it including giving too much value Plusnet's Workplace Operating System
2. I didn't do enough research into the company before buying their shares

There were also a number of unforeseen circumstances that contributed to the share price rapidly falling:

1. I bought my shares literally a week before the whole of the market fell earlier this year.
2. Plusnet made a number of mistakes leading to customer dis-satisfaction
3. A month or so after I bought the shares, TalkTalk announced FREE broadband followed by other companies (SKY, Orange etc.) jumping on the bandwagon.

I was correct in predicting that Plusnet would be a takeover target for an industry leader within 12 months of buying the shares, so I'm happy about that, but I didn't forecast that the share price would drop so much before it happened. In fact, if I'd have bought the shares a few months ago when they were £1 each, I would have more than doubled my money. Hindsight's great isn't it

Anyway, I'll be using the £420 to invest in some more shares soon and I plan to be a lot more successful this time with a little experience under my belt.

Wish me luck!