Buy or not?, page-24

Not taking up your allocation is simply leaving money on the table for those of us who do take up shares. The maths is simple enough: assuming the 12cps pre-recapitalisation underlying market value is unchanged, then you are basically being asked to pay 5cps for shares that have a theoretical post-recapitalisation price of 6.4cps. That's an instant 28% STAG for the taking.

Now add to this the fact that AGO will be a less risky beast after this restructure than before and you can bet that the risk-discount that was previously applied to the shares WILL be at least partially unwound. Let's be conservative and assume that it is only worth 5%. Now add that 5% to the 28% and you get an expected STAG of 33%.

None of this accounts for the fact that shorters will probably want to avoid the uncertainty of a potential spike in the SP, so you'll get a large number of them rushing for the exits at once, which will make it easy peasy to realise your STAG at full value.

Still don't believe me? Then take a look at what happened to the SPs of the companies that recapitalised in the depths of the GFC, take a look at the property trusts, Wesfarmers, Rio Tinto, BOQ, Virgin Blue etc. Sure not all of them recovered their pre-GFC highs, but ALMOST ALL of the buyers of capital raising shares did very very well out of their newly issued shares. The GFC was a much bigger threat than a falling IO price, which is a purely cyclical phenomenon.

I've taken up a BIG allocation of shares already because I know that some of you chooks don't have the balls to be greedy when others are fearful.