The S&P/ASX 200 Index (ASX: XJO) is currently down 24.5% since the beginning of the falls.
It’s been pretty painful for investors of large caps like Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB). It has been painful for infrastructure investors with shares like Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL).
Not many shares have held up.
So who’s actually making money during this period? Well capital raisings seem to be a money maker for two groups – institutional investors and the investment banks doing the raisings. It’s good news for an investment bank like Macquarie Group Ltd (ASX: MQG) which is earning fees from the raisings.
Institutional investors are getting the opportunity to swoop in and invest sizeable sums of money into various shares at share prices that regular non-shareholder investors can’t access on the market.
We’ve seen shares like Webjet Limited (ASX: WEB), G8 Education Ltd (ASX: GEM), Bapcor Ltd (ASX: BAP), InvoCare Limited (ASX: IVC) and even Reece Ltd (ASX: REH) do capital raisings at attractively cheaper prices.
One of the lessons learned from the GFC by professional investors was that these discounted capital raisings are among the best opportunities during these periods.
But regular shareholders can take part as well. Whilst people like you and I aren’t able to buy millions of dollars of these capital raisings, it’s okay. We don’t have a fraction of that type of money to invest! Each raising is different but generally investors are getting the opportunity to invest at least $10,000 if not substantially more.
Not many people are sitting around with $10,000 to invest in a single share at the moment, though smaller applications are possible of course.
It is possible to make money during this period, but it’s only for those lucky and opportunistic investors (and the shorters). You need to apply the same level of scrutiny to these capital raisings as you normally do to any potential share investment. Even more so in these times. But they generally could good buying opportunities.
Where to invest $1,000 right now
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor, Macquarie Group Limited, Sydney Airport Holdings Limited, Transurban Group, and Webjet Ltd. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended InvoCare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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