I believe several SEC rules apply here.
I'm not the most up to date on SEC reporting requirements, but I believe the most important rule is for a purchaser who purchases more than 5% of the outstanding shares, must file with the SEC within a certain period of time (30 days? Or perhaps within ten days after the end of a calendar month:? I don't remember for sure.)
GE has previously bought 380,000 shares on the open market for 5.2% of the outstanding shares, and has warrants to buy another 6.25% at $7.80 a share (close to book value). If GE bought any additional shares, they will have to report it. If it was another buyer who bought the shares, then they will have to report under the 5% rule.
I think GE was probably the buyer. And its easy to see why GE is buying. The company has $53M in current assets, and only $25M in total liabilities. This means there are $28M, or almost $4 per share in net current assets-liabilities. We can buy the stock for not much more than the net cash plus AR the company has.
Eventually, the top line for this company will start growing again, and then this stock is an easy double, because it should trade at least a 20-30% premium to book, IMO.
Paul |
