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AMPH - Secondary stock offering. Why would this happen?
Old 06-20-2007, 12:48 PM   #1
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AMPH - Secondary stock offering. Why would this happen?

This is not exactly a stock pick, but it is individual stock question...

I've owned a we bit of AMPH for a while...not enough to worry about it even if it went to zero...its been a very slow performer for many years (also very thinly traded)

Anyway, today the company announce a secondary stock offering of 2,100,000 shares at $16.50...and the stock goes up to $18.50 +/-...but I can't figure out why.

Why, if they are going to dump 2M more shares on the market at $16.50, would people be rushing to buy for $18+/share? I sold 1/2 mine, thinking it'll probably drop back down...but maybe I don't understand what is going on....anyone? DSX offers more shares and (as one would expect) the stock drops...why is this doing the opposite?
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Old 06-20-2007, 12:53 PM   #2
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Beats the heck out of me.
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Old 06-20-2007, 01:10 PM   #3
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These are probably privately owned shares, perhaps a chunk of the startup ownership, being offered for public sale. Hence no dilution. But not exactly a big "buy" signal afaic.
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Old 06-20-2007, 01:37 PM   #4
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It looks like huge volume compared to normal (450k instead of 10k), so I guess someone wanted to buy a large stake?

It looks like 2 of the 2.1MM shares are offered by the company and 100k by the CEO. The underwriter has options for 315k shares for the next 30 days.
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Old 06-20-2007, 02:03 PM   #5
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Thinly traded stocks often do the opposite of what you would think. They defy the "normal" rules of how stocks generally operate........

I remember when CMGI and others would have horrible numbers showing them losing many millions of dollars each quarter, but because they were "out buying goodwill" their stock would go up 5-8% that day..........
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Old 06-20-2007, 03:38 PM   #6
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Okay, made me look.

The CEO is offering 300,000 shares. The company has been aggressively buying back its own shares over the last 5 years. Thats probably the source for much of the 2M other shares being offered.

In other words, they used to think their own shares were a good deal. Now they dont.
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