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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (39237)	9/11/2010 1:10:53 PM
From: Spekulatius	Respond to of 78763

re the fund. So let me see if I get this right - the fund trades at 12$ (NAV is currently 21$ but would be 16$ after the rights are exercised). The rights allowing you to purchase more shares at 12$. So essentially they have no intrinsic value but they should have some residual value as a short term call option. Now as to the question if it makes sense to buy rights and let them expire worthless , I assume for a small investor it would not be worth the trouble. if many would do it it would help to reduce the dilution Furthermore it could well be that there are oversubscription rights - some offerings allow investors to obtain more new shares (they have to sign up for it) if other investors let their rights expire. This is another way for management to make sure their offering is fully subscribed. Car to post the name of the fund here? The very NAV dilutive offering is not a sign of a shareholder friendly management but the fund shares may already be punished enough for it.