Re: [CANSLIM] MGAM - Another conventional wisdom question

From: "Leo Antons" <antons@charter.net>
Subject: Re: [CANSLIM] MGAM - Another conventional wisdom question
Date: Wed, 3 Apr 2002 06:20:04 -0500

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Excellent thought-provoking post, Tom. Doesn't such a large increase in
shares require shareholder approval since such dilution would dramatically
affect their holdings?

- ----- Original Message -----
From: "Tom Johnson" <tjohnson@covad.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, April 02, 2002 8:49 PM
Subject: RE: [CANSLIM] MGAM - Another conventional wisdom question


> Steve,
>
> Just an observation about announcements of stock sales.
>
> The intent of MGAM to issue 2.8 million new shares to the 12.19 million
> outstanding represents about a 23% dilution for its shares.  If the
> pre-announcement market capitalization of the firm was about $423 million,
> and nothing else announced today changes the expected future earnings
> stream, then the shares would theoretically drop 23% to offset that same
> increase in outstanding shares.  Indeed it dropped less than 9%, meaning
it
> had a great day and/or was announced late enough that many have not sold
> yet.
>
> The CEO's additional authorization to sell 200,000 of his personal shares
> would represent further downward pressure equivalent to today's whole
volume
> in that stock.  MGAM may place all these shares through institutions
> (presently 64 institutions own 57% of the outstanding shares) and brokers
> which will entail some greater visibility (presently only 2 analysts
follow
> this company).
>
> I'd offer that you should adjust your stop down so you do not get stopped
> out as the company is just as strong as it was fundamentally and no
> technical weakness.
>
> Tom Johnson
>
> -----Original Message-----
> From: owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
> Sent: Tuesday, April 02, 2002 4:48 PM
> To: canslim@lists.xmission.com
> Subject: Re: [CANSLIM] MGAM - Another conventional wisdom question
>
>
> Steve, I am regularly amazed at the number of stocks I see where inside
> information obviously leaked before being made publicly available, yet I
see
> little enforcement action by the SEC. While today was an overall ugly day,
I
> would agree that the drop was at least caused by this news, as it is the
> kind of news that induces selling.
>
> I have seen some stocks in past months able to rebound back from this type
> of news, largely seems to depend on whether they have institutional
support
> and/or whether it will be institutions that will take down this offering.
If
> the latter, they will support it at some price, but only they know the
> price.
>
> The lack of volume today may be of some encouragement, but if you can
place
> a hard stop, and don't already have one in place, I would do so tonight.
>
> Tom Worley
> stkguru@bellsouth.net
> AIM: TexWorley
> ----- Original Message -----
> From: "Steve F" <stevepdv@yahoo.com>
> To: <canslim@lists.xmission.com>
> Sent: Tuesday, April 02, 2002 6:27 PM
> Subject: [CANSLIM] MGAM - Another conventional wisdom question
>
>
> Mgam dropped 9% today and after the close there was an
> announcement that the company is issuing an additional
> 2.8 million shares.  I am assuming the drop was
> related to the announcement even though the drop came
> before the news.
>
> Hang on or run ??.....Still not at my stop price
>
> Thanks
> Steve
>
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