General Public Distribution
Categories: Investing, Managed Funds
Most stocks you buy come from a previous shareholder. If you log into your trading software or call up your broker, the shares you get don't come directly from the company. They come from someone else who held the stock. Like buying socks on eBay vs. buying new ones in the package direct from the factory.
A general public distribution comes into play when you buy shares directly from the company. The cash you spend on the stock goes directly to the firm, rather than to a previous shareholder.
Companies raise money by selling stock all the time. The first time they do it, the process is called an "initial public offering," or IPO. Once on the public market, the company makes secondary offerings whenever they want (if they can talk their shareholders into accepting the dilution). To do this, the company sells additional shares into the market.
However, when these offerings take place, the process usually involves an intermediary. A large Wall Street bank typically underwrites the venture, basically buying the stock themselves and then reselling it to large shareholders. From there, those whales might resell it again on the open market, where you can finally pick up some shares using your trading software or broker.
The general public distribution skips this underwriting step. The shares are made available directly to the public, not sold through an intermediary.
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Finance: What is Capital Gains Distribut...20 Views
Finance a la shmoop what are capital gains distributions? cap gains app
hap-happy day.. your mutual fund invested a hundred grand in whatever.com it then [Mutual fund appears]
was bought by Google for three hundred grand
three years after you invested at least that was your portion that three hundred
grand well you had a gain of two hundred grand
on your investment and because Google paid cash not stock in acquiring
whatever.com on your books the gain was realized ie turned into cash so then the
mutual fund has to distribute to you that capital gains ie the cash it [Capital gains definition appears]
realized in selling the company to the kindly loving people at Google whose
motto is do only a little bit of evil right so one more time for the people in
the back how does this capital gains distribution thing work well the fund
manager looking out for your mutual fund may sell or buy some of the stocks or [Fund manager appears with stocks and bonds]
bonds in your fund if she sells and makes a profit well then that profit or
the proportionate gains part of it has to be distributed to the fund holder and
that's you and then of course you got to pay taxes
on that distribution if your fund is held in a normal account like it's in a
401k or an IRA you'll pay taxes on it later but not right away and if you own
it personally well you'll pay at that year yeah Uncle Sam always needs to get [Uncle Sam appears]
his cut when there's capital gains distribution if he doesn't he gets angry
and you know you wouldn't like Uncle Sam when he's angry [Uncle Sam turns into Hulk]