Frankly, Carmine, I'm not sure what to think here.
Do I understand this secondary?
No, not completely. It strikes me as a little strange;
however, in all of my past experiences with companies that
have made secondary issues of stock the proceeds have been
used by the company for capital improvement, debt reduction,
construction, or some such. This case, where we basically
have an owner who wishes to sell a part of his holdings, is
very different.
do you understand how GAC is able to stay at $43?
Sure. People are willing to buy at $43.00, but not $43.50;
people are willing to sell at $43.00, but not $42.50.
(Sorry, Carmine, I just couldn't resist. It's late,
and I guess I'm a little punchy. No offense taken, I hope.)
Is it telling you anything that the price is maintained?
At this point, all I can say for sure is:
1) The first of the shares from the secondary appear to have
hit the street on May 13.
2) Total volume since the 13th has been 9,627,800 shares
(see below).
3) Even if we assume that every transaction in GAC shares
since the 13th has been for shares from the secondary (an
assumption I do not think we can reasonably make),
just under half of the 18 million shares referenced in the
S-3 SEC filing have yet to trade on the exchange floor. So,
it seems likely (to me, at least) that the bulk of the
shares were directly placed with institutions at the
offering price, and that those institutions are holding.
4) Average daily volume over the last 10 trading days has
been over 950,000 shares, almost three times the 52-week
average of ~320,000 shares/day, yet the price has remained
stable. So, apparently the influx of those new shares that
have made it to the exchange floor has not depressed GAC's
share price, in spite of the fact that
5) its generally been a bad market of late. So, maybe the
stability in price is a good indicator. Maybe we'd be up near
$46 or $47 if the Bull hadn't paused to catch his breath.
My friend, I think we just have to wait and watch. I, for
one, believe that GAC is a great company with outstanding
prospects for long term growth. I also have faith that,
eventually, the market at large will wake to the fact that
this company has been available at bargain basement prices
for quite some time now. When that happens, my shares (and
yours) will rise in value. In the mean time, I'll quietly
acquire more shares as my cash flow permits.
And, if you get to feeling frustrated that the stock seems
to be going sideways right now, just remember that one year
ago GAC shares were trading at $29.625. Remember that,
think about the 45% gain and the fact that we are STILL
undervalued, and smile. Its what I do.
FWIW, the volume figures since the 13th follow.
Regards,
__Creighton
Date Total Volume
1998-05-27 871200
1998-05-26 655200
1998-05-22 751400
1998-05-21 434600
1998-05-20 479900
1998-05-19 310300
1998-05-18 1037100
1998-05-15 398900
1998-05-14 697600
1998-05-13 3991600
Total volume: 9,627,800
(5/27 and 52-week volume data from quote.yahoo.com.
Historical volume data from teleserv.co.uk ) |
