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News that Mannatech makes and sells vitamins apparently prompted
a selling spree, shaving much of Wednesday's gains from the company's
stock. The stock closed at 31 3/4, up 9 1/4 or 41.1%, after climbing
as high as 44 1/2 midway through the trading session. Volume late
in the session reached 1.9 million shares.
Mannatech officials didn't immediately return calls seeking
company.
This isn't the first time confusion about a company's business
sent its stock on a roller-coaster ride.
An announcement last week from Nasdaq officials that Vertica
Software's symbol had been changed caused the stock's value to
plunge. The announcement apparently caused investors to realize
they had bought shares of Veritica Software, and not IPO shares
of VerticalNet. Vertica Software, which trades on the Nasdaq bulletin
board, changed hands recently at 1 1/4. The stock closed at 4
5/8 on Feb. 9 in the midst of the confusion over the symbols.
Analysts said best efforts public offerings of the type held
by Mannatech are generally completed by companies whose financial
histories and prospects for growth are weaker than most companies
planning public offerings. "It might be a marginal offer from
a company whose financials just barely meet the Securities and
Exchange Commission's requirements. The deals aren't very popular
with investors," said Robert Mescal, an IPO analyst with the Institute
for Econometric Research in Deerfield Beach, Fla.
Another cautionary flag that investors apparently ignored was
the amount of stock sold by selling shareholders. Of the 3,056,016
shares in the offering, 1,556,016 shares came from shareholders
while the rest was sold by the company. According to a filing
with the Securities and Exchange Commission before the IPO was
priced, some of the selling shareholders were to include executives
of the company.
Also worth noting: the selling shareholders and other original
holders bought their stock on average for 9 cents a share.
Mannatech has a recent history of revenue growth and earnings.
Indeed, the company's only reported loss came in 1994, its first
full year in operation. For the nine months ended Sept. 30, 1998,
the company reported earnings of $8.6 million on revenues of $122.8
million. A year earlier, the company earned $8.9 million on revenues
of $111 million.
Mescal said nutritional supplements "seem to have a general
acceptance among the American public," which could partly explain
the interest in Mannatech.
Mannatech said in its prospectus that the deal would have been
cancelled if the company had been unable to sell a minimum of
2.5 million shares. All money collected from potential shareholders
would have been returned if the minimum figure hadn't been reached.
By Dunstan Prial; (201) 938-5354
(END) DOW JONES NEWS 02-17-99
05:09 PM
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