This thread's primary purpose is to identify potentially profitable secondary offerings and to provide a forum for the exchange of pertinent information about secondaries.
The term "secondary offering" loosely refers to any of the following three different types of stock sales:
(1) The most common use of the term "secondary offering" refers to the sale of a large block of previously-issued securities owned by an "insider" or current shareholder. The proceeds of this type of "secondary" go to the shareholder, not the issuing company, and the number of shares outstanding does not change. (2) A second type of secondary offering, sometimes called a "Follow-On Offering", refers to the sale of newly issued securities by a company whose stock is already publicly traded. While this type of "secondary" involves a dilution of the EPS because of the increase in the number of outstanding shares, it does provide the issuer with funds with which to expand its businesses and may be viewed favorably even by the existing investors. (3) A third type of secondary offering refers to what is sometimes called a "Combination Offering". A Combination Offering includes both an insider-selling secondary component and a company-selling Follow-On component.
Secondaries are typically priced in close proximity to the closing price of the security on the day the pricing terms become effective.
Often times the price of a stock will move up dramatically in the days which follow a successful secondary offering, sometimes by as much as 100% in just a week's time. |
