Companies on watchlist for capital raising/SPP

[RogueTrader273]

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Registering tax file numbers and bank accounts details with Link/Computershare

Adding up dividends and franking credits for tax returns

Capital gains/losses when you come to sell



Also, most companies are doing renounceable issues nowadays, so the strategy is unlikely to work.....

Was great during the GFC though

Are you re-advising the registries of your details every time you do a trade then?

 

[gooner]

Are you re-advising the registries of your details every time you do a trade then?

No but you need to update for each new company you buy

 

[RogueTrader273]

No but you need to update for each new company you buy

Update what?

 

[Judd]

Just be aware of the ASX rules in timing in regards to SPPs (Appendix 7A: Timetables)

Security Purchase Plans

An entity must follow the following timetable for an issue of securities under a security purchase plan.

Date to identify security holders who may participate in the security purchase plan.

1 business day before the entity announces security purchase plan.

Entity announces security purchase plan.

The business day after the date to identify security holders who may participate in the security purchase plan.

Note: Security Purchase Plans are not processed as corporate actions by CHESS, therefore there will not be an ex date. Introduced 01/06/10.

Essentially it means that if you are not already on the share register when the company announces an SPP, you cannot participate in that SPP by purchasing shares after the SPP has been announced.

Cheers

 

[So_Cynical]

Update what?

Your details TFN, bank account, communications, DRP.

 

[RogueTrader273]

Your details TFN, bank account, communications, DRP.

Have you traded shares before? You don't need to do this. And why worry about DRP's if the purpose is to only retain one share?

 

[So_Cynical]

You don't need to do this. And why worry about DRP's if the purpose is to only retain one share?

^Yes good point......however if your going to hold 1 share of all ASX200 stocks then you can expect dividend payments from about 150 of them which should add up to an amount, approximately equal to 3 or 4% of the money you have "invested" in those 200 shares.

200 shares with an average price of $5.50 (guessing here) = $1100 so a annual return of 35 > 40 bucks and maybe $15 in tax credits....lol

Your right its not really worth mucking around with it...have you actually looked at how many discounted SPP's (ASX200) there were over the last 12 months? have you done any projections as to what you could make?

 

[RogueTrader273]

Your right its not really worth mucking around with it...have you actually looked at how many discounted SPP's (ASX200) there were over the last 12 months? have you done any projections as to what you could make?

Sure have, check out http://blog.traderdealer.com.au/category/sharepurchaseplan/ and
http://www.maynereport.com/articles/2009/06/14-1500-4361.html

With one share in hundreds of coy's, I get a lot of 1c and 2c dividends auto-paid to my account, so they're not even worth talking about. Btw why are you fixated on the ASX 200? I'll take money from any company that wants to hand it out myself...

 

[So_Cynical]

Sure have, check out http://blog.traderdealer.com.au/category/sharepurchaseplan/ and
http://www.maynereport.com/articles/2009/06/14-1500-4361.html

Ok so a quick flick thru the pages reveals that there's lots of 2 bit prospectors looking to raise money, because they don't actually make any....so no surprises there.

With one share in hundreds of coy's, I get a lot of 1c and 2c dividends auto-paid to my account, so they're not even worth talking about. Btw why are you fixated on the ASX 200? I'll take money from any company that wants to hand it out myself...

In no way am i fixated by the ASX200, my portfolio has stocks with MC's from 35 million to 11 billion and a micro cap fund...i was assuming you would target, or at least include the bigger stocks in your "1 of everything" plan, otherwise you could end up putting alot of money into stocks that don't have any and don't make any...and i am not to confident that's a plan with a high probability of a good outcome.

 

[RogueTrader273]

As a matter of interest, anyone know if you can get into a capital raising more than once, e.g. using your own individual name as well as your self-managed super fund (or a company or trust for that matter)?

 

[oztrades]

As a matter of interest, anyone know if you can get into a capital raising more than once, e.g. using your own individual name as well as your self-managed super fund (or a company or trust for that matter)?

Yes if you have already purchased the shares under different names/entities such as individual/company names. Otherwise send them a cheque and stamped self addressed envelope for return of said cheque if the answer is no.

Interestingly I did that and got the said cheque back... then the announcement came back that the shares were undersubscribed and that the underwriters took up the shortfall... Did I really just say that?

 

[awg]

As per posts 105 and 111

KGL has announced a capital raising and rights issue.

The point of interest being you can purchase prior to rights issue, ex is 17th

rights issue is 3 for 5 at 13c

capital raising for "institutionals" at 15.5c was approx 88% scaled back !

back on market today after trading halt, trading range 18.5 to 20c

closed 20.5 friday, so thats holding up very strongly imo, given whats happened to POG, and the discount

this is a good looking prospect and i will be taking my full allotment

see ann today...dyor..you need to be on the share registry to participate

 

[robusta]

Just curious, as a general rule, why look for capital raisings except to keep away from them?

Correct me if I am wrong but the main reasons for capital raisings are:

- Acquisition. Given Australian companies long and proud history of paying too much in a takeover why would you want to be giving money to the buy side of this transaction. This often leads to a bloated goodwill figure on the books to be written down at a future date. (take a look at PRY)
Probably the worse example of this would be ABC learning, everyone was looking at the earnings growth and forgot to look at the massive ammount of capital the shareholders and banks were tipping in and the declining ROE.

- Expansion. The best companies with a very few exceptions have such a strong cash flow and competitive advantage, they can expand organically out of retained earnings.

- Debt Reduction. This is one of the worse reasons, the best ROE you can get on this additional capital is bank interest.

Look at it from a business owners point of view, would you rather own a business that after the initial investment is regularily requiring extra capital injected into it or a business that after initial investment can earn a return on that investment to grow and pay you back?

One of the worse things IMO a company can do regarding capital raising is to pay a dividend in the same year it raises capital. Think about it they are triggering a tax event to payout the dividend at the same time asking you to tip more money into the company with your after tax dollars. This is not treating share holders like owners, it is treating them like suckers.

Maybe I am missing the point of this thread and there are trading opportunities around capital raisings and I admit sometimes it is a opportunity to buy into a excellent company at a discount but as a long term investor I would rather stay away from most of them.

 

[So_Cynical]

Maybe I am missing the point of this thread and there are trading opportunities around capital raisings and I admit sometimes it is a opportunity to buy into a excellent company at a discount but as a long term investor I would rather stay away from most of them.

I think the point of this thread is that often capital raisings/SPP's are done at a significant discount to the last closing price, also they can over the longer term often be seen to be share price turning points and thus a great time to buy...and or average down if your a longer turn holder/true believer.

Alot of people made alot of money participating in cap raising during the second half of the GFC, late 2008/early 09....speaking for myself.

• MRE issue price 0.30 and now 0.79
• SUN issue price 4.50 and now 9.38
• EVG issue price 0.30 and now 0.13
• MDL issue price 0.62 and now 1.22
• TRY issue price 2.00 and now 3.44

 

[skc]

Maybe I am missing the point of this thread and there are trading opportunities around capital raisings and I admit sometimes it is a opportunity to buy into a excellent company at a discount but as a long term investor I would rather stay away from most of them.

Fair points. From a long term investor perspective perhaps the only good capital raisings are those related to expansion opportunites. E.g. Small explorer making the leap into a producer.

I guess it is up to the individual traders what to do with the information here - either avoid the companies on the list or trade around these opportunities. But if you hold the shares already you will probably silly not to participate as long as the offer is in the money.

 

[awg]

Just curious, as a general rule, why look for capital raisings except to keep away from them?

Correct me if I am wrong but the main reasons for capital raisings are:


Maybe I am missing the point of this thread and there are trading opportunities around capital raisings and I admit sometimes it is a opportunity to buy into a excellent company at a discount but as a long term investor I would rather stay away from most of them.

I agree mainly, except you left out the main type I participate in;

that is explorers transitioning to producers..they usually do repeated cap raisings in order to develop the resource..it is virtually unavoidable, but the small cap resource sector has been performing very strongly, so unless you participate, you are diluted...or miss out altogether

Ultimately you are attempting to get the best discount to future value for any stock, so you would have to check the figures.

Agree with So_Cyn about GFC jobbies like ANZ, CBA, RIO, all good

Havent had too many go sour ( yet)