Rights issues are cheaper than IPO's ?

Quibit · 1 Rights issues are cheaper than IPO's ? Fri Mar 11, 2011 11:28 pm

Quibit

Senior Vice President - Equity Analytics

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Hey guys,

We all need to look at EPS, PER, NAV and PBV... Also IRR and NPV based on DCF...

If you r a chartist... I am sure u wud be looking at MacD, Ocillitaors and RMO... And why not candlesticks and fibinoacchi retracement..

Many IPO's and Rights issues. What is cheap can always be verified through the ratios and numbers. I get this feeling that Rights issues are cheaper than IPO's. Known devil is better than the unknown.......

It's good if we could analyze side by side and say what is good an bad..

Quibi

Gaja · 2 Re: Rights issues are cheaper than IPO's ? Fri Mar 11, 2011 11:40 pm

Gaja

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well generally to get the rights, 1st IPO's are must i feel, what is your answer i like to compare with the Rights Issue with Public Offer?

anu · 3 Re: Rights issues are cheaper than IPO's ? Sat Mar 12, 2011 8:30 am

anu

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Quibit, very good point and sensible argument.

More often than not, I also have seen that in my experience. I for one, do not participate in IPOs. If a rights issue comes with a good enough pricing as per my analysis, I buy those shares and use the rights. Sometimes I do get lucky by getting more shares by applying for more than the right entitlement.

Advantages:

1. Dealing with known devil than an unknown angel
2. Probability of big volatility is rather low as market trend, volatility, performance are well established
3. No waiting in agony, blocking the money for a pittance of 100 shares at the end of the day
4.Less shocks and surprises like in IPOs, like whether the listed price will be higher, lower or by what degree and how the share price will behave after a couple days, couple of weeks etc.

A case in point is SEYB. Smart investors can take a calculated dip, if it suits their appetite.