Buying 1 of every stock?

[JWR]

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]

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]

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]

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]

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

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]

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

AMC is a good one...

 

[Aussiest]

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]

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]

I think 1 of every stock will work a treat.

Use the Visa to pick them up.

 

[skc]

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]

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]

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]

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]

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]

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

 

[Miner]

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]

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]

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]

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]

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?