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Keryx Biopharmaceuticals Inc. Message Board

  • crazitjo crazitjo Mar 3, 2013 2:36 PM Flag

    Breakdown of the offering..................

    The 8,234,000 shares were distributed as follows: J. P. Morgan...............................4,229,805 shares
    Barclays Capital..........................1,015,252
    Citigroup Global Markets..............1,015252
    Oppenheimer..................................424,051
    Stiffel Nicolaus...............................424,051
    JMP Securities..............................424,051
    Roth Capital..................................233,846
    Brean Capital................................233,846
    Ladenburg Thalman.......................233,846

    If the option to pick up the additional 1,235,100 shares is taken, which it was, the approximate % breakdown would be similar to the above.

    SEC filing 424B5

    And in case you didn't know some of the above are Market Makers of KERX..................................

    Sentiment: Strong Buy

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    • I do think these numbers show what happened on Friday. This is just a portion of what the shorts need to cover.

    • They are covering today and very organized so they don't get squeezed.

    • So now that they took it down to 6.50 and made their money on the downside. They should be protecting it on the upside and their profit. Yeah a few pennies each way doesn't matter. Someone should check the short count on Kerx to see if has lowered.

    • Everyone is assuming that the underwriting group exercised their green shoe to buy up to an additional 15% of the secondary offering, but could someone explain to me why they would have if the market price was below the exercise price, which is $7.98 per share? Also, I have not seen any press release or 8-k indicating that the underwriters exercised their over-allotment. Could someone please post a link?

      If I understand how underwriters typically use this type of green shoe option, the underwriters would have immediately sold short the additional shares they had the green shoe for, which was 1,235,100 shares. This way, the underwriters ensure they make money since the exercise price is $7.98 they immediately make $.50 per share and they can wait to either exercise the option within 30 days if the price goes up and obtain a further gain or they can cover their short at prevailing market prices if lower and also obtain a further gain. Either way, they win and make money.

      That being said, I don't understand why they would exercise the green shoe with the market price being lower than $7.98.

      I suspect there is another explanation and it is just a coincidence that the stock was up on the 30th day after the offering. We'll see this week.

      Maybe I'm just not understanding this green shoe option; if so, perhaps someone could set things straight.

      Happy trading!!

      • 2 Replies to high_on_stocks
      • high, during the Citi presentation the CEO stated outstanding shares around 82 million. Now before the offering outstanding shares were 72 million, so the only way to get around 82 ml is add the 9. 479 ml to the 72 ml and you get around 82 ml give or take.

        Now about the price. They could have immediately went short with those shares and rode them down to $6.50 or so for a couple buck profit per share then went long starting at that price and gained 69 cents at the close $ 7.19. So they have made $2.69 per share on the short and the rebound. So those 9.5 million shares might have fetched them around $26 million in profits already and if they stay long when it hits $ 8.50 they would profit another $ 13 million. So in essence they could have a profit of $ 39 million when the stock price gets back to $ 8.49.

        Now I'm not saying this happened but this might give you the gist of what could happen and it's perfectly legal. Just like Market Makers can short and naked short and that is also legal. These guys have ways of
        making money that the average guy has no clue about.

        Sentiment: Strong Buy

      • With reference to the same filing above from crazitjo, it also states:

        involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

 
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