Subscription Rights

By elg_66, October 12, 2019

I just got an offer from Gabelli GDV fund to purchase ”rights” for additional common shares. What does this mean?

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Travis Johnson, Stock Gumshoe Recent comment authors

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Travis Johnson, Stock Gumshoe
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GDV is a closed-end fund, and a subscription rights offering like this is much like a secondary offering for a common stock — they give current shareholders a slight discount in order to raise more money and expand the fund. In technical terms, it’s sort of like a warrant — you’ll get a subscription right for each share you hold, and you can buy new shares for 10 subscription rights plus $20 each. The current share price is above $20, so this is a “discount” to induce you to buy more shares at about 3-5% less than market price (and… Read more »