The stock market is looking healthier and healthier again, and it is not just because the S&P 500 is within striking distance of 1,700 and because the DJIA has crossed back over 15,000. We are seeing major secondary offerings from companies themselves and from their insiders and backers. When companies sell shares it is generally into a strong market. That being said, investors have to sometimes wonder if they want to buy stock when a company wants to sell more stock to the public.
24/7 Wall St. has tracked offerings from and involving the following companies: Armstrong World Industries Inc. (AWI); Enbridge Energy Management LLC (EEQ), Enbridge Energy Partners L.P. (EEP), Inergy Midstream L.P. (NRGM), Marketo Inc. (MKTO), Starwood Property Trust Inc. (STWD), Stratasys Ltd. (SSYS) and Virtus Investment Partners Inc. (VRTS).
What should really stand out here is not just that these combined offerings come to more than $2.4 billion. We did not include several other offerings, and those in total would come up to close to another $1 billion. We have added color and reference on each offering versus its average volume and size.
Armstrong World Industries Inc. (AWI) has an offering of 10,057,382 common shares held by Armstrong World Industries, Asbestos Personal Injury Settlement Trust and Armor TPG Holdings. Note that the company has agreed to purchase 5,057,382 of the 10,057,382 common shares of this offering at a price per share equal to the price paid by the underwriter. Shares are trading at $52.37, and the 52-week trading range is $43.30 to $58.48. This is some $520 million in gross dollars, or about $250 million if you back out the shares being repurchased.
Enbridge Energy Management LLC (EEQ) has filed to sell 8 million of its listed shares (units). Proceeds will be used to invest in an equal number of i-units of Enbridge Energy Partners L.P. (EEP). Enbridge Partners will then use the proceeds to purchase additional shares to repay its commercial paper, to finance a portion of its capital expansion program and for general partnership purposes. The "Management-EEQ" units are down 4% at $28.67, against a 52-week range of $25.81 to $32.30. The "Partners-EEP" shares closed at $30.20, versus a 52-week range of $26.88 to $33.49. This comes to almost $240 million before the exercise of any overallotment shares (units).
Inergy Midstream L.P. (NRGM) is trading down by 4.6%, at $22.19 against a 52-week range of $21.03 to $26.01, after filing to sell 11 million common units. The gross proceeds appear to be around $242 million or so. Be advised that the units are being sold by its limited partners.
Marketo Inc. (MKTO) already has filed to sell 6 million shares of its common stock, with 5.3 million being sold by existing shareholders and Marketo offering about 700,000 shares in the offering. This offering may seem small at about $200 million, but this is right into a lock-up period since its IPO came out in May. Many investors find offerings in bad taste on a "Sell as immediately as you can," but this one did very well since its IPO as well.
Starwood Property Trust Inc. (STWD) has priced a 25 million share offering of common stock to raise just over $600 million in gross proceeds. The company intends to use the net proceeds to originate and purchase additional commercial mortgage loans and other target assets and investments, and it included the "for other general corporate purposes" disclaimer in the release. The $600 million compares to a market cap of about $4.04 billion, while the 25 million shares compares to an average daily volume of about 2 million shares.
Stratasys Ltd. (SSYS) is selling 4 million shares of its ordinary shares, representing close to $400 million in gross proceeds. Its market cap is just over $4 billion, and it trades about 825,000 shares per day on average.
Virtus Investment Partners Inc. (VRTS) has done incredibly well as a stock, and it has now filed to sell roughly $175 million worth of its common stock. That would be roughly 1 million shares based on the current price, versus an average daily volume of only about 50,000 shares. Virtus has a market cap of $1.37 billion before the impact of this offering.
These were just the offerings that we deemed to be of significant value. There were seven or eight other offerings that probably come close to another $1 billion or so in combined size. As a reminder, when companies and insiders sell more stock, those funds to purchase the new shares on the market generally are used in place of what would have otherwise been market-oriented stocks.