I have my account at Scottrade and the India Fund Inc. (IFN) rights got deposited today (instead of last Monday). I called up Scottrade (Richmond) because rights offer subscriptions can only be done on the phone but they can’t do anything about the offer now because ‘it is not in their system yet’.
Last year, unlike now, everything happened on time except that Scottrade took money out to pay for shares from the rights around one month later than the shares were deposited into the account! I’m hoping they do that this year too 🙂
Hi:
I just invested in IFN recently and received these rights as well. It seems like it is an easy 30% gain to excersise the rights at 95% of NAV. It also sounds like IFN extended these rights last year as well and you took advantage of it. How did it go? Did you make a nice gain off of it?
Regards,
Jeff
Hi Jeff,
Last Year I owned a lot more shares of IFN than I do now and I did make a nice gain from the Rights offer. I am considering oversubscribing this year.
Siddharth
Friends,
The notice says that you have to be an owner as of July 3- does that mean if I buy 100 stocks on July 31st/Aug 1- I am not entitled to this offering?
-Sharma
Correct, you are not entitled to the offering.
So I’m relatively new to investing and I was just sort of curious the affect a rights offerring as such would do to the market price of IFN once the rights offering is complete. I figure it would dramatically dilute the market value of the stock.
Actually, the money collected in the rights offering is used to issue completely new shares. So there is no dilultion. However the shares are issued at a discount of 5% to NAV, so the Fund takes a loss of 5% on the newly issued shares. I’m not exactly sure how this affects the Fund but I would guess it is nothing major.
Well, if you look back at the date the shares were handed out, you’ll notice a lot of volume and a large price drop (Aug 9th, I think). Basically, everyone got their shares around 2:00PM and tried to sell right away. This increased supply lowered the share price to within 5% of the NAV (Net Asset Value = the real value of the shares in the fund). The premium to the NAV used to be almost 30% and this offering narrowed that significantly. Thus, the shares you had originally dropped, but the shares gained through the offering were worth about 10% more than what you paid.
Conveniently, the NAV continued to rise and the stock has also within the 5% premium. We’ll see how long this lower premium lasts. I have hopes that the stock will continue higher.
Monday morning quarterbacking this: the best thing to have done was to sell the shares you already owned the day the offer was made, but use the rights you have to buy more shares that you then contnue to hold for the long term. I’m dumb and only did half of this.