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Arch Coal Inc. Message Board

  • lutrader5565 lutrader5565 Jul 29, 2009 10:40 AM Flag

    secondary is broken

    If you have been following my posts, you know that I was calling for a secondary for two weeks.

    I also predicted an offering price of 15.5-16.

    Unfortunately, ACI and its bookrunners thought they could get away with an offering in the 17's. This was incredibly stupid on the part of ACI management. The market is at a 2 week high. Oil was right up against resistance levels and is now heading back down to 60. ACI will be trading down 10-15% from here.

    Rather than pricing the deal at 16 and having the deal massively oversubscribed, they tried to trick people into paying up for the stock.

    ACI management could be the worst in the sector. They waited far too long to do the secondary and when they finally did it, they mispriced it.

    This is one deal that you can't buy and set a stop below the offering price. In fact, you should probably short ACI and only cover if it closes above the offer price.

    Look to buy around 15.

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