A number of my stocks at the moment are issuing stock at a discount to market, either through rights issues or share purchase plans. I'm a bit torn what to do with these, as not taking them up seems like leaving free money on the table. Taking them up probably leaves me over exposed to these companies. Taking them up an selling on market may be the way to go, but will involve a capital gains tax hit. What would you do:
Examples (all are Australian stocks)
AGL: 1 for 5 rights issue. Issue price $11. Market price $14.11. Instant gain: 28%
QBE: Share purchase plan. Up to $15,000. Issue price $10.10 share price $11.57. Instant gain: 14.5%
Despite already having significantly holdings in these two companies, I think that not taking these up would be silly. Issuing stock at such a discount has a significant dilution impact for shareholders, but that's already done, so to avoid the dilution, I think I'm pretty much obliged to participate in these?
The thoughts from the MMM community?