Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Any common trading patterns after a secondary offering?
Date: Wed, 20 Nov 2002 21:45:49 -0500
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Top of Thread: Re: [CANSLIM] Any common trading patterns after a secondary offering? Sol Mayer
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my general experience is that 90% of stocks will decline in price =
between the date where the secondary is announced (or a few days before, =
depending on how good their internal secrecy is) and the day that the =
deal is priced. Many (most?) are priced at or slightly below the prior =
day's closing price. Some will bounce up the day they or priced, or the =
day after, but generally getting the offering out of the way is seen as =
a positive, so all else being equal the price tends to rise after that. =
If the offering was solely and strictly to register already existing =
shares (e.g. a secondary) then the offering announcement tends to have =
equal negative affect, and completion of the offering tends to have less =
positive affect (since the company didn't get any money from it).
If it is a primary offering (company selling new shares, so gets the =
money from them), then the key for me has always been what they intend =
to do with that money. If they are just paying off debt, big whoopee. If =
they are using it for growth, acquisition, etc., then that tends to have =
a stronger positive affect.
- ----- Original Message -----=20
From: Sol Mayer=20
To: canslim@lists.xmission.com=20
Sent: Wednesday, November 20, 2002 10:19 AM
Subject: Re: [CANSLIM] Any common trading patterns after a secondary =
offering?
I don't know whether BVF is the best example as I think they had some =
regulatory issues in the interim. But I'm a little biased as I'm stuck =
in FOX which just announced a secondary and I'm in a little quandry as =
to what to do.=20
Katherine Malm <kmalm@earthlink.net> wrote:=20
Hi Ian,
I've read financial studies that conclude that in the near term, a =
stock will fall on the secondary offering while the market absorbs the =
additional shares. In the long run, however, the stock performance =
depends more on the ability of the company to expand their =
revenue/earnings. In other words, the same thing that creates the =
underlying value for the shareholders in all cases. If the offering is a =
primary, where funds actually go to the company, it becomes particularly =
important, as the investing community looks for evidence that the =
company has effectively utilized the funds for growth.
I can't be of any help on the near-term trading patterns, as I haven't =
seen any specific studies on the phenomenon. I've uploaded a chart of =
BVF, which we discussed here on the CANSLIM list last year about the =
time they announced their secondary offering (approx mid-November). From =
what I've observed personally, this is a pretty typical chart pattern. =
See it at:
http://WallStreet-LLC.com/canslim/BVF111902.JPG
Katherine
----- Original Message -----=20
From: Ian=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, November 19, 2002 9:49 AM
Subject: [CANSLIM] Any common trading patterns after a secondary =
offering?
i all:
I was wondering if anyone had any real experience following stock =
trading
patterns after issuance of a secondary offering? What is the typical =
pattern
after the initial volume surge? Assuming that CANSLIM fundamentals, =
and
quarterly results are strong, will there be a lag before a price =
move? Is it
goof or bad for the near-term price action? Does it matter if the =
pricing
was a little below or above the previous days close? Is there =
something to
watch for on volume? Any input would be appreciated.
Than you,
Ian
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<DIV><FONT face=3DArial>my general experience is that 90% of stocks will =
decline=20
in price between the date where the secondary is announced (or a few =
days=20
before, depending on how good their internal secrecy is) and the day =
that the=20
deal is priced. Many (most?) are priced at or slightly below the prior =
day's=20
closing price. Some will bounce up the day they or priced, or the day =
after, but=20
generally getting the offering out of the way is seen as a positive, so =
all else=20
being equal the price tends to rise after that. If the offering =
was solely=20
and strictly to register already existing shares (e.g. a secondary) then =
the=20
offering announcement tends to have equal negative affect, and =
completion of the=20
offering tends to have less positive affect (since the company didn't =
get any=20
money from it).</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>If it is a primary offering (company selling new =
shares,=20
so gets the money from them), then the key for me has always been what =
they=20
intend to do with that money. If they are just paying off debt, big =
whoopee. If=20
they are using it for growth, acquisition, etc., then that tends to have =
a=20
stronger positive affect.</FONT></DIV>
<DIV> </DIV>
<DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
<DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
title=3Dsmaye1211@yahoo.com href=3D"mailto:smaye1211@yahoo.com">Sol =
Mayer</A> </DIV>
<DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV><B>Sent:</B> Wednesday, November 20, 2002 10:19 AM</DIV>
<DIV><B>Subject:</B> Re: [CANSLIM] Any common trading patterns after a =
secondary=20
offering?</DIV></DIV>
<DIV><BR></DIV>
<P>I don't know whether BVF is the best example as I think they had some =
regulatory issues in the interim. But I'm a little biased as I'm stuck =
in FOX=20
which just announced a secondary and I'm in a little quandry as to what =
to do.=20
<P> <B><I>Katherine Malm <<A=20
href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>></I></B> =
wrote:=20
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px =
solid">
<META content=3D"MSHTML 6.00.2800.1106" name=3DGENERATOR>
<STYLE></STYLE>
<DIV>Hi Ian,</DIV>
<DIV> </DIV>
<DIV>I've read financial studies that conclude that in the near term, =
a stock=20
will fall on the secondary offering while the market absorbs the =
additional=20
shares. In the long run, however, the stock performance depends=20
more on the ability of the company to expand their =
revenue/earnings. In=20
other words, the same thing that creates the underlying value for the=20
shareholders in all cases. If the offering is a primary, where funds =
actually=20
go to the company, it becomes particularly important, as the investing =
community looks for evidence that the company has effectively utilized =
the=20
funds for growth.</DIV>
<DIV> </DIV>
<DIV>I can't be of any help on the near-term trading patterns, as I =
haven't=20
seen any specific studies on the phenomenon. I've uploaded a chart of =
BVF,=20
which we discussed here on the CANSLIM list last year about the time =
they=20
announced their secondary offering (approx mid-November). From what =
I've=20
observed personally, this is a pretty typical chart pattern. See it =
at:</DIV>
<DIV> </DIV>
<DIV><A=20
=
href=3D"http://wallstreet-llc.com/canslim/BVF111902.JPG">http://WallStree=
t-LLC.com/canslim/BVF111902.JPG</A></DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dianstm@shaw.ca href=3D"mailto:ianstm@shaw.ca">Ian</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Tuesday, November 19, =
2002 9:49=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Any common =
trading=20
patterns after a secondary offering?</DIV>
<DIV><BR></DIV>i all:<BR><BR>I was wondering if anyone had any real=20
experience following stock trading<BR>patterns after issuance of a =
secondary=20
offering? What is the typical pattern<BR>after the initial volume =
surge?=20
Assuming that CANSLIM fundamentals, and<BR>quarterly results are =
strong,=20
will there be a lag before a price move? Is it<BR>goof or bad for =
the=20
near-term price action? Does it matter if the pricing<BR>was a =
little below=20
or above the previous days close? Is there something to<BR>watch for =
on=20
volume? Any input would be appreciated.<BR><BR>Than=20
you,<BR><BR>Ian<BR><BR><BR><BR>-<BR>-To subscribe/unsubscribe, email =
"<A=20
=
href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In=
the=20
email body, write "subscribe canslim" or<BR>-"unsubscribe =
canslim". Do=20
not use quotes in your email.<BR></BLOCKQUOTE></BLOCKQUOTE>
<P><BR>
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Previous Article (by Author): Re: [CANSLIM] Market tops "Tom Worley"
Top of Thread: Re: [CANSLIM] Any common trading patterns after a secondary offering? Sol Mayer
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