Fisherman, PLUG does have top tier underwriters, however it's not a given that PLUG will trade significantly over the proposed pricing. A case in point, PlanetRx was taken public yesterday by GS and HQ, it was priced at $16, opened for trading in the low 30s, hit 36 in a matter of minutes and it just nose dived from there. Today it closed at 24 1/2. PLRX is an internet stock, PLUG is not. PLRX has backing from some well known VC firms.
When PLUG begins trading, you'll see a discount of PLUG's intrinsic value in MKTY's stock price. The higher the price of PLUG, the higher the discount. You may want to review the trading relationship of many other similar cases such as: DBCC/MKTW, IDTC/NTOP, MALL/UBID, DLIA/TURF, BRKT/ISPD, ZD/ZDZ etc...
A discount exists because of many factors, including:
1. Investors who want to own PLUG can own PLUG directly, why bother with MKTY
2. MKTY is restricted from selling its stake in PLUG for at least 180 days, in the meantime PLUG can lose value whereas PLUG owners can sell anytime.
3. Those who wish to short PLUG but can't for various reasons CAN short MKTY as a surrogate.
Let's face it, MKTY's core biz is worth only a few bucks. People own it now because of MKTY's ownership in PLUG. These investors will soon sell MKTY and buy PLUG instead.
Regards,
Tom |
