This is where investing separates those prepared to stand up from those that are just plain gambling, with no idea....
As an investor that believes in the find, then you will do as I will, take up the offer, even though we could buy more on market 'cheaper'. If we are prepared to buy at all, the money is far better off with the company and so is our investment..
If everyone has the attitude that it's cheaper to buy on market, so buys from a seller, instead of the company, then the overall 'cap raise' will fail and likely be detrimental to the share price anyway. If people took up their entitlement, then in the longer run, assuming ongoing success, it would be highly beneficial for the share price.
The big end of the market is assuming that all the mums and dads will again fold and not partake in something that's below current price, so they will keep it at this level until after the closing date if possible.
Small shareholders are fickle, always complaining about not getting first offers, yet should the SP dip below the raise price, as it has done here, tend to not participate and buy cheaply on market instead. It's because of this fickleness that companies chose to go with sophs and institutions most of the time with the bargains, shareholders can't be trusted to support the company when it counts.
A few years ago Strike did a SPP at 23c. I took up my full entitlement at 23c, despite the SP falling to 18c during the raise period. They only raised $240k via the SPP, of which I and the MD both contributed $30k each. Do you think I have difficulty getting in contact with him when I want to???
I might once again be only one of a few that contribute as most are short term thinkers, but if you want the company to perform much better, then acting in tough times is what counts, forking out the cash when the company asks, if you believe in the project!!
Do I believe in the project?? Absolutely yes, would I prefer the PPSA was signed? of course!, Do I wish the SP was higher? Of course..
Will I take up my full entitlement?? Absolutely Yes!!
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