Australian (ASX) Stock Market Forum

Share Purchase Plans (SPP)?

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Hi guys.

What is SPP in simple terms for us beginners. is that a good thing? How does it work and how can we use it to our advantage. (Nokia used SPP strategy along other method to push himself from $1500 to $3000 in 8 months.)

Thanks
 

Bill M

Self Funded Retiree
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Re: SPP

Excellent article from KurwaJegoMac, for me I only buy if it is in my favour. I wait until the day before you have to pay and if the SPP turns out cheaper than what I can buy it on market then I take it up. If they have a fixed price for the SPP and the market has deteriorated substantially since the offer came out I do not go anywhere near them. No use saving $20 on brokerage if it's going to cost you a few hundred dollars more, good luck.
 

pixel

DIY Trader
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Re: SPP

Excellent article from KurwaJegoMac, for me I only buy if it is in my favour. I wait until the day before you have to pay and if the SPP turns out cheaper than what I can buy it on market then I take it up. If they have a fixed price for the SPP and the market has deteriorated substantially since the offer came out I do not go anywhere near them. No use saving $20 on brokerage if it's going to cost you a few hundred dollars more, good luck.
That sums it up, Bill:
If you have done your homework and find the share is worth owning at the price, it's a no-brainer. If you regret ever getting involved with it, why waste good money after bad?

If I hold a company that offers me the opportunity to top up at a discount, I also consider this strategy:
Do I hold "enough" shares already? If so, why not sell some or all, knowing that I can buy this many back at a fixed price.

Good example recently was RDR. I was given the oportunity to buy up to $15,000 worth at 58c, but my position sizing for this particular stock was only $20K, So I sold three quarters of my holdings at 64.5c - that was all I could get at the time. Then I watched how it performed - and made my decision at the last moment, BPaying a day before Close. If you look at the chart, you'll know whether I'm smiling or not.

Earlier this year, I had the opportunity to buy ARW in another spp for 1c; in that case, I even received some free options in the bargain. That, too, was one I took up in full: If you add the current prices of ARW and ARWO, you'll again know that 1c was a reasonable purchase.

I won't claim that all shares that offer me an SPP are like that, but as I'm rather inclined to get rid of dogs before they desperately need more money to survive, I tend to fare quite well with SPPs.
 
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