TSX:SGR.UN - Post by User
Comment by
logicandinertiaon Mar 31, 2021 12:38pm
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Post# 32914710
RE:Another BOTCHED Deal - RECEIPTS DOWN!!
RE:Another BOTCHED Deal - RECEIPTS DOWN!!That isn't how an overallotment works.
A greenshoe allows the underwriters to sell up to 15% more shares for up to 30 days after the close of the deal. In essence, they become short the stock, in this case 1.7 million additional shares, by "overselling" it.
If there is enough demand at prices above the offering price, then the company issues shares at the issue price to cover the underwriter's short position (leaving the underwriter flat). If the price is weak, the short is covered by the underwriter in the market at prices below the offering price, providing support for the stock, but this doesn't result in the additional 15% more shares being issued by the company.
On such an illiquid security, such as a sub receipt, drawing conclusions from a single day's trading upon close of the deal won't provide much market IQ. It only takes a few decent size trades on the sell side to cause some drift in the price. this could be related to fill size % for new investors, or a myriad of other reasons. no reason IMO to worry in the near term.