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Brokers probably don't want to waste their energy and potentially cause confusion by sending out notification until clients have actually qualified for the rights.
They couldn't know in advance how many shares you'd be holding at close yesterday.
"The reason that this not similar to ex div because, everyone knows the amount of div long before the date. as normally on exd the sp fall by the same amount unless general or specific reason the price moves away; same any share on a given day."
I think you've misunderstood what I was trying to say.
What I was trying to say was, if the record date was the day after the ex date they'd be no need to process market claims for rights. It only really affects those holding share certificates.
It doesn't make sense to me either. Why would the company need a placing to fund MiQ? Wouldn't any such investment come from assets under management?
Story that BPT is set to take a majority investment in MiQ. "Sources familiar with the deal" said the investment is expected to be announced in the coming days.
Could be announced sooner, now the news has leaked.
"Record Date for entitlements under the Rights Issue."
My understanding (others may correct me on this) is that the share register on the record date is used to determine where to despatch the provisional allotment notices for the rights. This applies to people holding in certificated form and doesn't concern the majority of PI's who these days hold in broker nominee accounts.
Regardless of the record date it's still the ex-date that determines who is entitled to receive the rights. In this case the record date was close of business today. However, the shares will still be trading cum-rights tomorrow. This means that someone holding shares in certificated form who sells them tomorrow will receive a provisional allotment notice but they will be instructed to forward the notice to the buyer (usually via their broker who will administer the market claim).
It seems to me it would be easier if the record date were the day after the ex-date (as it normally is with dividends) as this would align with the T+2 settlement period and avoid the need for market claims. Perhaps it's to ensure certificated holders receive notification before the rights commence trading. I don't know.
"Looks like shorts closing as the Record Date for entitlements under the Rights Issue is close of business today."
It's the ex date that matters. Entitlement is based on holdings at close Friday (tomorrow).
"You don't see it as doubling your exposure?
Surely you end up with double your holding, more or less, if you take up all the shares possible?"
I agree, if you take up your rights. What I'm talking about is from Monday morning for holders who haven't taken up rights yet. They'll still be holding the nil paid shares.
My thinking may be wonky but as I see it from Monday they'll start trading like they will as a fully paid stock. Given the AMLN nil paid shares are geared, a 1p move in AML ex-rights is equivalent to a 5p move in terms of today's AML. It means the overall volatility in your long position is likely to increase, even if you don't intend taking up the rights.
For longs I think it's approximately doubling your volatility exposure, rather than doubling your total exposure. Obviously, if you don't take up the rights, you're not exposed to a loss any greater than your original investment!
"so effectively, a RI increases your short exposure due to the new shares?"
Actually, I think it increases longs exposure two, about double. In other words, even if you don't plan on taking up your rights you are exposed to them from Monday.
"so effectively, a RI increases your short exposure due to the new shares?"
Yes, I think so. About double I think.
Overall you should be no better or worse off they trade ex on Monday, because the drop in the value of the original AML shares. However, the nil paid shares will be geared in that a 1p change in AML will result in a 1p change in the AMLN nil paid shares, therefore a 5p change in your overall position.
Assuming you're short via spread bet or CFD then I'd expect any short positions held at close on Friday will receive an additional short position in the 4x nil paid rights on Monday morning, taken out at zero. The nil paid rights might trade in the range 60p-70p.
"A loss is only a loss if you sell at a loss"
Sorry, I don't get that. That's a head in the sand mentality IMO
Are you suggesting that if your shares are currently 25% below your buy price and you hold on to them you'll be no worse off if they fall another 25%, because you haven't liquidated the position?
Your shares are an asset and you've suffered a reduction in your wealth, whether or not you dispose of the shares.
Shares are just another asset class, along with cash. Why do you restrict the measurement of loss to your cash assets?
It's weird to me why you'd want to add to a losing position in order to 'average down'. Is averaging down a way of trying to kid yourself the loss isn't so bad really?
When deciding whether or not to buy more or to sell you should ignore the price you bought at. That's history, there's nothing you can do about that. Base your decision solely on where you think the price will be heading in the future and the risks. Would there be somewhere better to invest your money?
I agree @Ghini, I didn't intend to comment of the viability of the company's prospects and I did caveat with "as long as the market doesn't lose faith in the company".
It's market sentiment you need to be concerned about not dilution, which I'd argue is emotional and illogical.
EG68, what you're describing is known as tail swallowing.
Some people sell some of their nil paid rights in order to fund taking up the remaining rights. Some people sell some of their original holdings to fund taking up the rights. In this case the ex-rights value of the original holdings almost certainly won't be sufficient to take up all the rights, which will require 412p per original share.
Please understand that, in spite of the way they're portrayed, rights don't give existing holders any preferential price over anyone else buying the shares ex-rights next week. Existing holders pay for the rights 'discount' through the drop in value of their existing shares. Also, as I said earlier, the true cost of taking up your rights is not 103p, it's 103p plus what you could have otherwise received selling your rights. Market efficiency ensures that cost is much the same as anyone else buying in the market, apart from you saving dealing costs and 0.5% stamp duty.
The upshot is, only take up rights if you would have bought the shares anyway because they do not really offer you a special deal.
Yes, about 167p not the current market price. The current market price is cum rights, i.e. it includes the value of receiving the rights. Obviously they'll tumble on Monday when they trade ex-rights.
You don't get anything for nothing and anyone buying ex rights on Monday will be able to buy them just as cheaply as it costs someone taking up the rights. Therefore only take up rights if you were going to buy more shares anyway.