Michael, Ciena and Goldmann Sachs capitalized on the revised SEC rule regarding insider sales for IPO stocks to release 10% of the lock-up in late May, and another 10% in the secondary offering. The other 80%, per their agreement, will be freely traded beginning Aug. 7. It's possible that additional shares will be released/sold prior to Aug. Theoretically the market should have discounted the upcoming dilution, but in my opinion, the scale is tipped only when the shares actually hit the market. The reason I think the market could not efficiently discount the lock-up expiration effect is because of these two main unknowns (1) number of shares insiders and venture capitalists will choose to sell in Aug, and (2) number of potential buyers who choose to wait till Aug.
My own conclusion is these venture capitalists will sell and sell most if not all of their 57 million shares. I also believe that Dr. Huber, the co-founder who recently left the company, will liquidate his 6.5 million shares. The other active insiders will no doubt cash in on their fortunes as well, but will likely leave some on the table.
As a side note, I think the market is at a dangerous unstable equilibrium position which will lead to a substantial fall. If it does happen, CIEN will suffer more than the average, as it did during the Spring correction.
I think a short position in CIEN is a lot safer than going long this stock.
Regards,
Tom |
