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Voltari Corporation Message Board

  • bosox_pats bosox_pats Dec 10, 2010 4:28 PM Flag

    This is how it works.....

    MOTR plans to file a registration statement for shares that are currently under restriction or legend prohibiting sale or transfer. Once registered, the restriction and/or legend will be removed. It is unclear how many shares will be offered and how many shares will have some level of restriction after the offering. In any case, this offering will provide for an orderly sale and entry into the market. The only dilution (additional shares issued and proceeds accrue to company) relates to the over-allotment option reserved for the underwriting syndicate. Interestingly, the preferred shares have a floor of $21.99 where the holders would have the option to opt out of the underwriting should the price fall below $21.99. So, guess what, the downside has been established at $21.99. The underwriters will have an incentive to keep the market above $21.99 so they receive full fees. Also, guess what, the company will be on a dog and pony show prior to the offering drumming up interest in the secondary. Typically you do not go on a roadshow with a sober story but rather an upbeat one. Lastly, the underwriters will take the over allotment because they believe the stock will trade higher post offering. In my experience, after the initial negative market reaction, these types of deals trade up into the offering and then after the offering as well. This stock will be moving up into mid-January........

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    • Thanks for the writeup. I am currently long at 27.50. What do you suggest I do? Should I sell on monday in hopes of it coming down, or should I double up at a certain price? Or should I just continue holding until it comes back to 27.5?

      • 1 Reply to rickshawfreak911
      • Well, I do not give investment advice. However, I believe the company has 2011 earnings power of $0.80 EPS. Revenues are growing on the order of 30 - 40%. Therefore, applying a multiple of 30x - 40X to these earnings gives a current price of between $24 - $32 per share. Should the company announce additional deals over the short-term, this range would shift upward depending on the quality of the deal. So, at the mid-point intrinsic value is probably $28 today with the potential to move up with additional deals. I am holding my shares.

 
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