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With the current price difference they're actually good as an arb trade at the moment

Long AMLN/short AML

That's a nice low risk way of scalping a few percent.

Sadly IG aren't taking new positions online in AMLN. Perhaps you can if you phone.

"Much better to buy the rights in the short term I would say. Same upside long-term and less monetary downside short-term."

If by "buy the rights" do you mean buy the AMLN nil paid shares? If so, you'll only have about ten days before you have to decide if you want to sell or cough up 103p per rights share.

If by "buy the rights" you mean exercising your rights please remember that the actual cost to you is not 103p. It's 103p plus what you might otherwise have got selling your rights (AMLN).

As it happens it does work out about 7.5p cheaper at the moment to buy AMLN and exercise the rights than it does to buy AML. (68p + 103p vs 178.45p), if your broker will let you buy AMLN. I suspect that gap will narrow.

Unless you are concerned about your voting power I don't think stock dilution is much of an issue with a UK rights issue.

With a rights issue you get to control how much dilution you'll take.

If you take up the rights in full you get no dilution.

If you tail swallow (sell some rights in order to fund taking up the remaining) you are diluted (in this case by about 50%) but this is offset by the increase in the market cap and you still retain the same level of investment in the company.

If you sell all your rights or let them lapse you've effectively opted to sell part of your holding. In this case about 60%. What's the big issue with dilution? It's hardly reasonable to expect your stake in the company to remain the same when you've got 60% of your investment back, is it?

If people really understood rights issues I doubt they would be so keen to take them up!

sudnal, "selling to the nunderwritter"? What are you on about.

Holders in AML at close on Friday should now see another line in their account - AMLN (Aston martin nil paid). They should be able to sell them via their broker, just as they would AML.

If holders let their rights lapse they'll receive lapsed rights proceeds (assuming AML are trading above 103p at that point). These are distributed from the proceeds of the rump (those rights that haven't been exercised), less minor costs. The lapsed rights value will be similar to what you'd have got selling the rights in the market, perhaps a bit less but within normal market noise.

A price move of 1p in AML today is worth a total of 5p when you include the AMLN nil paid shares you also now own.

So if AML is 10p above TERP of 179p you're 50p better offer than at close on Friday.

No, because the rights have value. If you don't take up the rights you get the money from the sale of the nil paid rights shares you now own (ticker AMLN). They'll track at about 103p below AML and are currently trading at about 90p. You therefore have 4*90p = 360p worth per AML share held on Friday.

I think the placing shares would have already been factored into the share price, before they got admitted.

The rise on Friday could be down to shorts reducing or closing, so as not to be exposed to the rights.

Looks like TERP of 179p with the nil paid rights (ticker ALMN?) at 76p.

Taken to the extreme, how would a 6 for 7 at 481p grab you? Not a lot I suspect, yet for anyone taking up the rights the end result is the same. The main difference is for those opting out of the rights, who receive little or nothing from a 6 for 7 because they're barely getting diluted.

I've long thought rights issues were a devious blag, if not an outright scam. They're a financial conjuring trick with terms like 'discount' and 'dilution' introduced for misdirection.

In fact, they're no more than the company begging you to buy more shares, but brand new ones from them rather than equally valuable used ones.

It's 4 rights shares for every 1 existing AML share held at close yesterday (Friday 9th).

For those exercising the rights can I ask, would you have been less tempted if it had been 1 for 1 at 412p, i.e less of a 'discount'?

The MiQ investment would come from the assets under management anyway wouldn't it, not company funds?

It seems it's almost certainly down to FTSE shenanigans .

FTSE had said they'd increase the investabily weight from 31% to 76%, effective 19 Sept. Tracker funds would have been more than doubling their holdings. That probably accounts for the recent rise.

On Thursday FTSE changed their minds. That probably accounts for the fall yesterday.

Imagine being an insider at FTSE!

https://research.ftserussell.com/products/index-notices/home/getnotice?id=2605512

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!