My thoughts on rights issuance
Rights issue = an issue of shares offered at a special price by a company to its existing shareholders in proportion to their holding of old shares. When I think of rights, I think of share dilution. More shares at cheap price for existing shareholders, some would scurry to sell off once they get hold of the rights share before the full dilution takes effect. Not all rights are right to get. However, if you decided not to get then you might be better off selling away the shares instead of holding them (before full dilution takes place as mentioned). A few questions you can ask yourself before taking the leap of faith are - why is the company issuing rights? This in turn gives answer to what it would do with the money gathered. Most of the time it is for paying off debts. Fair enough. But what's next? How are they going to turn their business around? What data did you get your convictions from? How are you able to minimise your risk? (From a bad past experience, when a compan...