Share Purchase Plans – Good Value?
Released: 04 Aug 2009
With the scramble on to raise money and reduce debt many companies are coming to the market with well priced share purchase plans (SPPs). Second line companies in particular are offering shares at good discounts to the current market price.
In the past SPPs were fairly tame affairs with the maximum value of shares available limited to $5,000 or less. Since the credit crunch many companies have applied for dispensation to increase the maximum to $10,000 or $15,000.
The higher amount of shares on offer has made some of the offers very attractive. With some of the offers up 10% to 30% below current market price they are providing good opportunities for investors.
There are a number of worthwhile strategies depending on each investor’s circumstances. These include the opportunity to “average down” the cost base of a share, crystallize capital losses, or just simply make a quick profit.
At the end of the day it is important that investors appreciate that there are always some risks in any share strategy, with the risks generally reflecting the potential profit. Investors are well advised to only apply for shares that they are comfortable holding for the medium term just in case markets take a turn for the worst.
The information provided above is for general information purposes only and has been prepared without consideration of the relevant personal circumstances of any individual investor. You should consult with your financial adviser before acting on the information.