Published on the web - According to FactSet, CCMP Capital Advisors LLC holds about 59%, or 39.9 million, of Generac's shares. The selling stockholders will receive all of the proceeds from the secondary offering.
ApparentlyCCMP Capital Advisors and GNRC Executive Management thought they deserved more money - outside shareholders, and employees holding stock be dammed..
Its obvious that they will do the same thing again, maybe slightly different timing and offering size - but the same result. The "market condition" that changed and caused the secondary offering to be withdrawn was the fear that they would loose more money on their current holdings, than they would make from the secondary offering.
The additional 11.5 Mil shares secondary offering will dilute the earning by about -17% (69.5Mil current outstanding shares + 11.5Mil new secondary shares offering).
Best case scenario is as follows:
GNRC all time high share price of $38.60 - 17% = estimated target price of $32.04
GNRC closing price before secondary offering announcment was $35.30. Less 17% due to secondary offering yields a target price of $29.30.
I'm not buying until its below $29 - or maybe never. I think I need a statement form GNRC management AND CCMP Capital that it won't happen again!!
"The additional 11.5 Mil shares secondary offering will dilute the earning by about -17% (69.5Mil current outstanding shares + 11.5Mil new secondary shares offering)."
These are not new shares. The shares are already issued and outstanding. There is no dilution. There is just an oversupply for sale today. When the west coast storm news gets translated into thousands of homes without power, the stock will rise again. When earnings come out for Q4, the stock will rise again. And some of this drop comes from sellers who think these sales are dilutive. That's why small caps are the way to go - so much ignorance to exploit.
Management is trying to capitalize on Sandy and the related outages. They know the stock will head back down to the mid 20s if another monster storm doesn't materialize soon. As usual, pure management greed. I won't be buying until GNRC is below $25/share.