and the market tells MGIC to prepare for another trip to the wood shed.
When, oh when will the punishment for that stupid secondary end?
Will the purpose of the now working capital, devoured 54M, which has cost shareholder twice that amount, ever be declared?
That is the question and the market has assumed the answer is 'no'.
We're being locked out of the party and everyone else is having fun!
Have a wonderful evening all!
Don't get me wrong. This management is very capable at running, and growing the business in a very sound and practical way. That's the reason I own shares.
The problem arises on the M&A front. For some strange reason, this financially astute and disciplined mgt seems to have absolutely no understanding on how Wall Street works. This is not the first time they've made a mistake in this arena which has seriously hurt shareholders. As to why they would repeat this mistake again, iI have no idea. It must be an Israeli thing or else they're not interested in their market cap and/or shareholders. I just don't get it. A biotech behaving the way they behave with the Street would be wiped out in short order. It makes holding MGIC shares a very frustrating ordeal. The company achieves success in the business but #$%$ off Wall street to the point of almost wiping out shareholders. This is the 3rd time I've been through this type of episode with MGIC and all three were totally unnecessary. Beyond incredible!
Uncertainty on where $16B will go - nonexistent.
Impact on MDT stock - None.
Lesson for Mr. B - Priceless!
When I read the first sentence I thought, by golly, I've helped reform a little boy with a nasty habit. But then you drifted back into you old self with some more childish insults. It's amusing that you think NPV is somehow a complicated concept. It's also amusing that you use the term in an oxymoron. i guess you don't really understand the concept. You should rewrite your post without the word: "will".
You're having a hard time understanding the problem with the secondary so perhaps I should explain it.
It is not a good idea to do a secondary, where the purpose for the secondary's funds is not precisely known.
If Magic had waited 'till it knew what it wanted to acquire, it could have announced those intentions with the proposed secondary. The market could then discount both sides of the coin, likely leaving the market cap static. This is the normal way this is done because, as most of us know, the market exerts a heavy price for uncertainty. You seem to be new to this area. I can't believe you are in possession of investing funds given your very limited knowledge of the market and how things work. I'd be careful making decisions if I were you. Despite your nasty anti-social behavior, we don't want to see you wiped out in your first foray into the market.
No, you're 'tupid.
No I'm not, you are.
But you're 'tupid
No, I'm not
Yes, you are. My mom says so.....
What are you, 9 years old? Can't you put a coherent argument together without resorting to these childish insults? If you can't argue like an adult, what the heck are you doing here?
What acquisitions are you talking about? There have not been any. Make-believe or imaginary acquisitions, in your head, do not count. After all these monthsr that $54M, which has reduced the value of existing shareholders stake in Magic by $108M, is available for general working capital purposes. To the market, that's code for:- "we can't support ourselves through operational cash-flow, could you please send us more funds, dear shareholders". Obviously the market is not impressed as seen by the 30% drop in the pps.
Do you have a single intelligent response or will we be treated to yet another 9 year-old temper tantrum, which displays a complete lack of understanding of the situation?
I sincerely hope your last name is not Bernstein. As a shareholder, I would strongly object if the CEO of the company I have invested in was wasting his time (which I obviously own) on this forum. You seem to have taken personal offense to my observation that the secondary, which raised a net $54M, was an exceedingly stupid way to raise capital. Would you offer a car salesman $108K for a car with a sticker price of $54K? Of course you would not, yet that is what Mr. Bernstein has just done, using shareholder capital. To say that the impact could not be predicted before the fact is also absurd. The impact of these types of secondaries is always the same. Now get back to work and stop moaning.
It is unusual for the market to forgive dilutions, especially unnecessary dilutions which tell shareholders that their BOD does not give a rat's #$%$ about their investment.
Magic has a nasty habit of doing secondaries whenever the price advances beyond a certain level. Long term shareholders are told to take a hike and the market is not deaf.
As of today, that Magic $54M secondary has cost shareholders $108M in lost equity value.
Could someone send Mr. B his bank manager's phone number. Next time he'll know where to go when he decides to raise $50M.
That foolish secondary may have blown away our capital to smithereens but we still have our divies to comfort us! We're minding our pennies while our pounds are providing solid combustible material for the bonfire!
Mr. Market did the honours today again, delivering yet more pain to long-time masochistic MGIC shareholders. Mr B., please can we have more. You haven't done a secondary in ages!
It would appear that Mr. Market has block-booked the woodshed for the next few months to accommodate ensuring MGIC shareholders are appropriately treated following their management's decision to dilute their investment.
This is to be expected folks. It's how the market expresses its feelings in times like these.
Ah, the life of the MGIC shareholder, always wondering when the next secondary will knock them senseless!
No mercy from Mr. Market once your mgt succumbs to the temptation of easy money. Who knows when that weakness will show its ugly head once again? That is what keeps a very solid lid on our pps.
It must be wonderful to be a young whiz kid, well-informed and smart enough to know you can call your elders 'fools'. I guess the definition of education has changed somewhat since I left school!
It's been quite a while since MGIC told us the funds raised in the secondary would be used for potential acquisitions and/or for general working capital needs. Since there has been no mention of an acquisition, we must assume the funds are being deployed to beef up working capital. Does that seem like a reasonable use of funds, which cost shareholders over 25% of their investment, to a '' smart whiz kid '' like yourself?
Fingers crossed Mr. B does not decide to raise more cash through another secondary. If that happens, we'll by crossing under to 50, and the 200 ma's again.
It might sound like a crazy thing to do, given the cash is not needed, but that did not stop Mr. B and his merry BOD last time.
and 25% to the Israeli gov. Wars are expensive and no reason MGIC shareholders should not be allowed to contribute!
What an obscene waste of money!!
What I know, or don't know, makes absolutely no difference. It's what the market doesn't know that is the problem. That is the reason we've gone from $9.50 to $6.50.
"Total net cash, cash equivalents and short-term investments as of June 30, 2014, amounted to $92.8 million."
But no mention of what to do with the loot from throwing the shareholders under the bus though!
Perhaps we'll be thrown under another bus so Mr. Bernstein can bring unused cash higher to $150M!
When you make the mistake of raising capital you don't need, and that mistake seriously harms shareholders, the solution is not to stick your head in the sand and pretend you didn't do anything wrong, as you propose. The solution is to admit the mistake and then do your best to undo it.
In this case that means a share buy-back.
If MGIC had a purpose for the $55M they raised, they would have shared that info with shareholders. They do not have a plan for it and therefore it is now time to admit the error and undo as much of the damage as possible. The damage has cost shareholders around $135 in lost equity value. Sticking their head in the sand could wind up cost that much again. That is not a solution.