I have been scratching my head long and hard to figure out why reputable firms would load up on DNDN shares prior to approval, in such large quantities. What is their motivation, prior to approval? Why not wait for approval first.
Would it not be difficult to unload such a position?
A gamble just doesn't make sense, too risky and difficulty in unloading position.
So, what is the alternative?
These institutional firms are setting their positions on eventual BUYOUT of DNDN once IMPACT results are released in April 2009.
I believe the buyer is Lilly. To satisfy its shareholders and conduct proper due diligence, Lilly needs to see successful IMPACT results of 22% and more.
Once these results are in, Lilly will proceed with hostile bid of about $ 60/share or $ 6 billion. This price is justified since it would equate to 3 years of sale in U.S. only.
Funds whom own large positions would have significant voting power for such a deal. Hence once buyout is approved they unload their millions of shares at a 2000% return, all in one shot.
The accumulation of shares is voting power.
Bam Capital LLC 10,000,000 shares 10.3% Capital Ventures 8,000,000 shares 7.6% Visium 5,429,810 shares 5.6% Barclays Global 2,140,598 shares 2.21% Barclays Fund 3,198,101 shares 3.30%, Morgan Stanely 3,161,592 shares 3.2% UBS 6,571,816 shares 6.70% Vanguard 1,321,177 shares 1.40% Jesaga Advisors 930,200 shares 1.00% Shaw DE & Co 620,714 shares 0.60%
Other matter of note, per www.mffais.com 50.1% of the institutional firms are buying DNDN.
Why is not price up? Because these firms are buying on the bid, not ask. The sellers are retailers. They buyers are institutional for BUYOUT in summer 2009.
Provisions of our certificate of incorporation and bylaws will make it more difficult for a third party to acquire us on terms not approved by our board of directors and may have the effect of deterring hostile takeover attempts. Our certificate of incorporation authorizes our board of directors to issue up to 10,000,000 shares of preferred stock, of which 1,000,000 shares have been designated as “Series A Junior Participating Preferred Stock,” and to fix the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of our common stock will be subject to, and may be junior to, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock could reduce the voting power of the holders of our common stock and the likelihood that common stockholders will receive payments upon liquidation. We have also implemented a stockholders’ rights plan, also called a poison pill, which would substantially reduce or eliminate the expected economic benefit to an acquirer from acquiring us in a manner or on terms not approved by our board of directors.