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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Craig Richards who wrote (3004)	5/8/1998 10:18:00 PM
From: steve goldman	Respond to of 4969

Hi Craig! ""I have some questions about secondary offerings, and how they work. -It would be my pleasure to help however I can, although I would quality everything with the fact that finance and underwriting is not my forte by any means. As head trader, you have a good idea, although some of the terms, specifics might be offf...bare with me... How are the date and price of a secondary determined? The company and the underwriter determine what the market will bear. They want to most they can get and wont give it away for free. They are diluting the company and want a fair price. How can I find out in advance what the date and price will be? Usually announced a few days before, determined a day or so before that. Do the shares of the secondary show up in the ticker and/or get reported in the daily volume of a stock? More stock comes available as soon as it son the market. Some may start shorting the stock knowing they will have secondard stock to cover. Is the secondary usually priced at, above or below the market? Usually below...if it were above, who would buy the secondary when you could get it cheaper in the primary market...why would you pay 10 for iomega secondary, the same common stock as that which is paid 9 for in the open market on nYSE. Sometimes people pay a premium for controlling big block, but sometimes get a disocunt for 'volume' as well. Who participates in a secondary? The syndicate or underwriters.... Do they know the per share price when they commit to buying a secondary offer? Usually know a range and then it usually priced the nite before similar to a IPO. If not, can they back out when they find out the price? I dont know how firm the indicatio of interest is...i think they have to committ to it..most dont back off because very ver very few are ever priced above market price for stock. Any suggestions on what to look for with respect to a secondary to determine future stock price direction? Usually down since it dilutes. Many short stock when they get chance to particiapte, take advantage of spread between secondary and common in market, this selling pressure and knowledge that market consider stock in secondary 2 bucks less than common stock, puts more downward pressure on it. Sometimes, in cash strapped companies, it can pop stock just a bit since its cash for operations. -Stev@yamner.com