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[sharechat] FFS Rights

From:	"Peter Riches" <peter@peaktechnology.co.nz>
Date:	Wed, 8 Nov 2000 15:56:15 +1300

Can any of you traders out there tell me why this wouldn't work please?

Buy (say) 100,000 FFS on Friday (which is, unless I'm mistaken, the record date for the rights issue) and sell them on Monday. The only money you have to part with is any difference between the buy and sell price. It would seem unlikely that the shares will drop more than a cent or 2 from Friday's close, so maybe you pay out $2000. At the same time (or later) you sell your 50,000 rights, which at today's head share price would be worth as much as $5000. The result is that you collect a tidy profit for very little effort or risk. Have I missed something?

I know there was some discussion here about this same concept with regard to the Air NZ rights recently but I couldn't follow why it wouldn't work then either.

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