Allianz SE and ESPP - Do it?

[Webzter]

Every year I have a chance to buy ADRs (American Depository Receipts) in our parent company, Allianz SE (ticker: AZ). There's a one year blackout period before you can sell and we get it at a 25% discount (if it's trading at $24, we buy at $18)

The amount I'm eligible to purchase is under $10,000 so it's a lot of money (work with me here, I'm trying to change my mindset from 'anything under $100mm isn't a lot of money' to 'anything over $50 is a lot of money') but not an amount that would make me lose sleep if it lost value (if it lost all of its value, I'd be worried for other reasons).

It seems like a no-brainer to participate to me. I mean, a 25% discount on a stock with a P/E of 8.6 combined with what I know about our risk exposure makes it feel like I'll at least be able to cash in on that discount in a year if I don't want to hold it forever. However, our advisor always told me not to do it because "the stock hasn't been doing anything". Of course, he's not my advisor any more and this advice seems suspect.

Do it or not?

[Texas Proud]

Originally Posted by Webzter

Every year I have a chance to buy ADRs (American Depository Receipts) in our parent company, Allianz SE (ticker: AZ). There's a one year blackout period before you can sell and we get it at a 25% discount (if it's trading at $24, we buy at $18)

The amount I'm eligible to purchase is under $10,000 so it's a lot of money (work with me here, I'm trying to change my mindset from 'anything under $100mm isn't a lot of money' to 'anything over $50 is a lot of money') but not an amount that would make me lose sleep if it lost value (if it lost all of its value, I'd be worried for other reasons).

It seems like a no-brainer to participate to me. I mean, a 25% discount on a stock with a P/E of 8.6 combined with what I know about our risk exposure makes it feel like I'll at least be able to cash in on that discount in a year if I don't want to hold it forever. However, our advisor always told me not to do it because "the stock hasn't been doing anything". Of course, he's not my advisor any more and this advice seems suspect.

Do it or not?

I think your math is off.... a 25% discount from $24 is $18.... not $1...


If you really get a discount of 25%... then of course DO IT...

After a year, take the shares out of the account, transfer them to a broker and SELL.... keep doing this with as much money as you are able... even if the stock goes down, it more than likely will not be more than 25%...

BTW... I say to take the shares... our plan will prevent you from buying more if you sell inside the plan... but you can take out shares anytime you want....

[Webzter]

Originally Posted by Texas Proud

I think your math is off.... a 25% discount from $24 is $18.... not $1...

Weird, I put in $18

Apparently 8 ) minus the space is a smiley 8)

And no need to transfer it to a broker, we buy through JP Morgan

thanks for the advice. I think it makes sense to do it.

[bongo2]

Yes you should do it and cash out as soon as the plan allows.

[brewer12345]

I would do it.

[maddythebeagle]

I researched some of this for my sister's bank plan.....you have to pay ordinary income tax on the 25% discount...and will be reported on your W2...

[kumquat]

Originally Posted by maddythebeagle

I researched some of this for my sister's bank plan.....you have to pay ordinary income tax on the 25% discount...and will be reported on your W2...

If you work there, you should have a good idea if the company will do well, hum-ho or disaster in the next 12 month. Watch the tax implications, I've heard of Canadian (therefore Canada's tax laws) 'hi-tech mega-corp' employees who bought company stock at a discount during the 2000 bubble and held through the tech collapse. They were left with 6 figure tax bills and relatively worthless stock.

[Texas Proud]

Originally Posted by Webzter

Weird, I put in $18

Apparently 8 ) minus the space is a smiley 8)

And no need to transfer it to a broker, we buy through JP Morgan

thanks for the advice. I think it makes sense to do it.

Let's see.... 8) yep...


Here is what our plan says..... and we have JPM also... it is what your plan says you can do... but ours is only 5% and they only buy 4 times a year so it is not that much of a deal...

If You Sell Shares Through the Plan If you decide to sell shares through the plan, your participation in the plan ends. In this case, your contributions stop as soon as administratively possible and you choose how your account should be paid to you, as described under "If You Voluntarily Close Your Account."



Remember




You can sell shares on your own by first withdrawing the shares from your account, or by transferring the shares to a book-entry common stock account. Withdrawing shares does not affect your participation in the plan. Please see "Withdrawing and Transferring Shares" for more information.

[justin]

If you're worried about the risk of allianz going down, buy a couple of put options dated out a year or so to hedge yourself against loss in allianz stock. If possible - don't know what's available for ADR's here.