Rights issues can be excellent...but.. not all rights issues are equal. Be discerning.
Broadly speaking... 3 kinds... wealth creating, concerning and parasitic.
*Wealth creating ... a Co. needs funds for a specific purpose i.e. an acquisition, exploration program or some other well defined activity upon which it is possible to conduct due diligence and form an investment opinion.
*Concerning ... for general purposes. In other words the Co needs money just to keep going.
*Parasitic... rights issues [frequently] have been successfully used to effect a change of control in Co's... such issues are steeply discounted and can be heavily oversubscribed with the bulk of new shares going to only a few people. Another variant is [again] only a few people getting steeply discounted shares ahead of some company changing event... those shares are then sold into the announcement [surprise, surprise, surprise].
