The price action and volume today leads me to the following possibility/thought:
1. FB places 2mm shares of AHR in one day 2. FB feels "great" and is "duly impressed as to the number of buyers for AHR. 3. "In life, if it feels good or makes money, do it again" 4. FB calls AHR Managment and says, "the market is here, let's do 4/8mm new secondary shares. 5. AHR says, ok, let's do it. 6. Information "leaks out" that a secondary is underway. Traditional institution buyers and underwriters "prepare" for the underwriting, by beating down the shares. 7. Stock starts to move lower. 8. AHR gets hammered. 9. x_stock get's his "dream scenario" of buying the stock at a depressed price. 10. Shares are priced at an "attractive price" 11. Successful placement leads to a "pop" in the stock price after the pricing.
Just a theory, but the stock acts like this today.
Another negative scenario would be that the company is not going to raise the dividend until it has the new shares issued and wait one more quarter before raising the dividend. That would hammer the stock good in the short run.
I would be disappointed in managment in either of the above two scenarios, in that, I think that raise should be a shelf secondary and that dividends should be raised without penalizing existing shareholders for new share issuance, and if the new share issuance is not eps accretive (in addition to book accretive) the company should not issue shares.
Interesting scenario, but I think you left out one step, somewhere between #6 and #9:
- Retail shareholders watch in bewilderment as the stock "gets hammered," not knowing whether to sell or add, while in-the-know institutions short the stock and clean up. Just another day on Wall Street.
No secondary, some was desperate to get out at discount. AHR is acting very weak and is trading near the low. There are no big blocks on the bid side. Historically the reason for going down will soon, but it is never late to follow the tape.
We sold a few days ago. And our broker told us to sit tight.