# Buying 1 of every stock?



## JWR (7 July 2009)

Hi,


Seeing as there have been a few capital raisings over the past few months, I was wondering everyone's opinion as to whether a strategy of buying one share in each of the top 300/500/1000 companies would pay off (by participating in future capital raisings?)

Is there a way you could do this in a cost effective way (i.e. low brokerage) and what are everyone's general thoughts on this plan?


Regards

JWR


----------



## Aussiest (7 July 2009)

I like your creativity. But, let's say you can get each share for a $16.00 round trip using IB, a $20.00 share would have to experience an 80% increase just for you to break even. To be in profit, each share would have to at least double. I can't see that happening for a while.


----------



## skyQuake (7 July 2009)

Aussiest said:


> I like your creativity. But, let's say you can get each share for a $16.00 round trip using IB, a $20.00 share would have to experience an 80% increase just for you to break even. To be in profit, each share would have to at least double. In effect, that would mean that the market would have to double in position. I can't see that happening for a while.




Think you have missed the point here, JWR is only doing this so he can participate in the SPP.

Also there would not be a round trip. You would pay $6 to buy the share... and never sell :

I've done the math for it with IB, and its decent risk/reward. Theres only a few Co's left that are yet to raise capital, which narrows the search. 
Putting a few dollars into a few speccies that are yet to raise capital would be a good bet. eg. AMC


----------



## Largesse (7 July 2009)

this has already been done for journalistic and research purposes by steven mayne.


http://www.maynereport.com/articles/2008/04/18-1611-3339.html



is an interesting read


----------



## skc (7 July 2009)

JWR said:


> Hi,
> 
> 
> Seeing as there have been a few capital raisings over the past few months, I was wondering everyone's opinion as to whether a strategy of buying one share in each of the top 300/500/1000 companies would pay off (by participating in future capital raisings?)
> ...




Many capital raising are proportional to your holding. 1-for-1, 21-for-42 etc. Holding 1 share will qualify you for a very small amount in many circumstances. What you want is actually participation in SPP. But these are slightly harder to come by, especially after the recent activities. Brokerage will be expensive, esp if you are stuck with 2 shares.

Let's say you buy the top 300. At $15 per trade that cost you $4500, or $9000 round trip.

What is the average SPP discount? Let's say 15%. To cover your costs you will need to purchase at least $9000 / 0.15 = $60K of stock. So first thing is to make sure you have this amount of captial to buy those shares.

What is the average SPP parcel? Let's say $5000. This means you will need at least 12 companies in your 300 to offer SPP. 

Do a count and see how many within the 300 has done so already, and how many will not need to do so (like WOW), and how many may bes. This will give you a maximum upside estimate.

The other cost is the dilution of your original holding. But that should be small given your small holding. 

So if you think these maths stack up then by all means go for it.

P.S. Please if you do go ahead, nominate to receive all annual reports / communication in electronic format and save some trees.


----------



## skc (7 July 2009)

Or as SkyQuake says - do it in a more targeted manner and save yourself some brokerage.

AMC is a good one...


----------



## Aussiest (7 July 2009)

skyQuake said:


> Think you have missed the point here, JWR is only doing this so he can participate in the SPP.




Oh yeah, oops. On the multi-task today.

Only problem would be, usually get 1 share per _n_ shares of company XYZ.


----------



## nunthewiser (7 July 2009)

think everyone missing the point that with MOST brokerages the minimum allowable parcel is $500 

i cant actually see how IB is allowed to buy less than that amount unless they originbally hold the minimum 500 as required by asx


----------



## Sean K (7 July 2009)

I think 1 of every stock will work a treat.

Use the Visa to pick them up.


----------



## skc (7 July 2009)

nunthewiser said:


> think everyone missing the point that with MOST brokerages the minimum allowable parcel is $500
> 
> i cant actually see how IB is allowed to buy less than that amount unless they originbally hold the minimum 500 as required by asx




It can be done with IB - I've done it trying to trick a market maker . Didn't work, but I am now a proud owner of a $12 parcel of shares. Finger crossed that they do a SPP.

On a side note - the minimum parcel requirement comes from brokerage firms, not the exchange. So I suspose IB can allow what they like.


----------



## nunthewiser (7 July 2009)

skc said:


> On a side note - the minimum parcel requirement comes from brokerage firms, not the exchange. So I suspose IB can allow what they like.




if i hold a minimum of $ 500 bucks of xyz with etrade i then can buy 10 bucks worth at a time if i so wish BUT i have to originally hold minimum parcel first ....... just wondering how come IB can do it with no original 500 buck minimum ...... not chess sponsered ? or not actually owning physical share and just an instrument of motherstock ?


----------



## skyQuake (7 July 2009)

nunthewiser said:


> if i hold a minimum of $ 500 bucks of xyz with etrade i then can buy 10 bucks worth at a time if i so wish BUT i have to originally hold minimum parcel first ....... just wondering how come IB can do it with no original 500 buck minimum ...... not chess sponsered ? or not actually owning physical share and just an instrument of motherstock ?




Dunno why, but I think its not chess sponsored? IB does something in the background. You don't have HINs and stuff and they do everything for you when applying for SPP and placements.

...or maybe they're an elaborate bucketshop  :


----------



## Strident (7 July 2009)

If all of the shares at IB held under the CHESS holding of their custodian, doesn't that mean all the investors would be treated as one holding for an SPP? 

Wouldn't that mean if there's 10 people applying for that SPP, they'd have to split it?


----------



## sammy84 (7 July 2009)

Not a bad idea. From memory I have been offered MQG, ANZ and AGO all done unproportionate capital raising's. I would like to go back and read the fine print however to see if a minimum holding was necessary.


----------



## MugPunter (7 July 2009)

So what companies do people think are still to offer an SPP?


----------



## Miner (8 July 2009)

MugPunter said:


> So what companies do people think are still to offer an SPP?




TRY IRL 
Offering share holders discounted shares @20 cents (no brokerage) upto $15000 based on market price average. 

BTW do your own research as after the announcement the share price dived down at 16 cents and now you can buy them from market @19 cents (today) plus brokerage


----------



## JWR (8 July 2009)

Thanks for the relplies.

Are there any brokerage firms that offer cheap trades if you have many trades at once (hoping to buy 1 of each of the top 200 stocks probably)?

Does anyone know what's going on with MLE's SPP - i bought shares last monday (last day to buy in order to qualify for the SPP) but haven't recieved anything in the mail?

Regards
JWR


----------



## Hideaway (10 July 2009)

A big problem with this strategy is the minimum share buy back / cancellation of shares that happens pretty frequently.

Basically there's a clause that allows companies to buyback all share parcels worth less than $500 to limit the administrative impost of having too many shareholders. This happens pretty frequently so I'd be budgeting on re-buying those shares several times throguhout the year.

On that basis, brokerage gets pretty expensive pretty quickly...


----------



## JWR (14 July 2009)

I see on the Interactive Brokers website a commission of 0.08% or $6 minimum per trade. This would substantially reduce brokerage costs if I were to buy just one share in each company.
Has anyone had any experiences with this company and could reccomend their products?

Regards,

JWR


----------



## alphaman (14 July 2009)

Strident said:


> If all of the shares at IB held under the CHESS holding of their custodian, doesn't that mean all the investors would be treated as one holding for an SPP?



Valid question. Anyone knows the answer?


----------



## SilverRanger (3 August 2009)

apparently there is no problem
https://www.aussiestockforums.com/forums/showthread.php?t=16214


----------



## Strident (3 August 2009)

happymark said:


> I have had plenty of disappontment with IB on share offers.  They scale back on most of them saying that IB just gets a package that must be shared by their customers. That is I order $15,000 and get maybe $3,000 this hurts when it's something like Macqaurie Bank.  Last effort was i requested NMS share offer of $15,000 on 15/7 (offer closes 17/7).  They reply to my message that on 17/7 at 11am that i had missed the "deadline".  Now if they get a "package" for IB that is shared among it's customers, then how can i miss the "deadline".
> 
> I give them a lot of brokerage and save on their great prices BUT I have lost a lot in missed profits from the many windfall share offers they have "handled".




That doesn't sound very reliable... 

(and then there's the other guy who got more than he would have otherwise)


----------



## skyQuake (3 August 2009)

Actually its more probably that the scaled back in the SPP because it was oversubscribed.
No problems with IB here.


----------



## skc (3 August 2009)

Brokers like IB may have a slightly earlier deadline than the offering company... it is the responsibility of the investor to find out what they are and not leave it to the last minute...


----------



## Prem (19 August 2009)

Doesn't first investment in a company have to be > $500

so i would think you cant buy one share of each


----------



## JWR (20 August 2009)

If you go through IB, I'm quite sure you can buy less than $500 per stock (i.e. 1.) So if I buy the top 300 stocks, this should cost $6 brokerage X 300 = $1800 plus whatever it costs for each stock.


----------

