Secondary offerings

Discussion in 'Trading' started by NasdaqTrader, Mar 2, 2004.

  1. I was wondering if anyone that traded secondary stock offerings in the past can comment on the effectiveness of buying these offerings at the offering price and how it tends to perform over the next few days or weeks.I recently started using a news site called the fly on the wall and it lists secondary offerings each day.I looked over several stocks over the past month that had secondary offerings and they seemed to have done well.On all of them,one could have bought the stock at the secondary offering price in the open market,and on the day the offering was done.I'm just wondering if the brokerage firm or firms that participate in the deal have interest in keeping the stock above the offering price,and if so,one could profit nicely from this.Here are just a few examples from the past month.

    Feb. 4-On Semiconductor-ONNN 47M share secondary priced@6.98; mgrs MSCO & FBCO...stock closed today at $8.60

    Feb. 24-Amphenol Corp-APH 8M share secondary priced@60.00; mgrs MSCO, SBSH & UBSW...stock closed today at $62.51

    Feb. 26-American Capital-ACAS 1.89M share secondary priced@33.04; mgr UBSW...stock closed today at $34.24

    Feb. 27-Rent-A-Center-RCII 2M share trade priced@32.32; mgr MSCO...stock closed today at $32.82
  2. I,ve only had a single experience with spo's. I saw on tv that Food Lion was going to be flamed on 60 Minutes and a few days later a broker from A. G. Edwards called and asked me if I knew what an ipo was. I said sure. He then told me that he was recommending something very similiar, a spo of Food Lion stock.

    I told him what I had heard on tv and he hung up on me, wham and went looking for another victim.

    Also in Marty Zwieg's book, he says not to buy them.
  3. chs245


    You will not be able to buy those secondaries on their offering price, except if you have an account with one of those brokers underwriting the offering. The market price usually is higher than the offering price, so it looks like free money, but it isn't.

  4. Today,GE did a secondary of 119 million shares at 31.83 per share.My question is why did the stock open up at 31.50.All those shares that were bought at 31.83 got screwed.
  5. chs245


    the offering was underwriten at 31.83, doesn't mean that the underwriters were able to place all of those 119m shares.

    the price action tells me that the underwriters were no able to place everything, and that the buyers of the offering are unhappy with the placing.