Don't let the Haze stop you from learning and doing exciting things!
This morning, we were extremely fortunate to have AK (a Singaporean Income Investor) at Value Investing College. Would you rather learn something beneficial that can maximize your passive income/build investment portfolio or be staying at home doing nothing?
Over a power packed session spanning the morning's hours, AK shared about the topic of Rights Issue VS Shares Placement!
On Rights Issue
Rights issue is a way for companies to raise capital by offering existing shares. This give existing shareholders to an opportunity to buy additional shares, usually at a discounted rate compared with the current market price for a limited time period. Investors can purchase Rights Issue shares in proportion to the amount he or she owns.
e.g. John owns 10 shares of company A at $100 each, company A is extending 1-FOR-2 allowing John to buy 5 more shares below the current market price of $70. An increase of shares in the market leading a dilution of share value.
Thus, John has 2 choices:
1) Let the Rights Issue expire
2) Trade the Rights Issue to another investor before the expiration date.
Why do Companies Rights Issue?:
Generally, there are 2 main reasons:
1) To raise capital to pay of debts
2) To raise capital for expansion
So what should be your next course of action?
Falling back to basics, you need to re-evaluate how company plans to use the new capital and consider if your additional investment will grow over a long run.
Other awesome things that AK taught!
(1) 15 key points to look out for when investing in S-REITS with real life examples
(2) Rights Issued VS Shares Placement
(3) AK's Investment Portfolio Sizing
(4) CPF VS SG Bonds VS Stocks VS REITS
(5) Properties (Overseas)
(6) AK's shopping list
(7) Cashflow (REITS) VS Earning (Stocks)
After AK's amazing sharing, the VIC community was familiar with AK's F.A.C.T blue print - a highly sort after plan of action among local investors!
If you have nowhere to go during this hazey period and have a burning desire (no pun intended) to achieve financial freedom, you may want to join us in our complimentary value investing workshop!
See you soon!
Value Investing College