WHY Pretium went to all-time highsWhat a fantastic perfomance for the Pretium stock and warrants today. The $16.80 ceiling over the stock finally broke open, and the stock, after an early drop, powered higher all day on heavy volume to close at all-time highs. The stock reached $17.51 to close at $17.47, and the warrants reached and closed at an all-time high $5.00.
My first reaction to news of a big stock offering was negative. But then I realized that 1) the company can raise millions of dollars with relatively minimal % dilution; 2) the stock is under-valued so it is likely to continue rising; 3) PVG will become part of the TSX Composite Index next month. This will likely cause an additional 2.5-3.0 million additional shares of buying; 4) some shareholders are front-running (so to speak) this information, and buying the stock now in advance of index-related buying; 5) The sale of PVG shares may be spread out over time and accordingly have minimal market impact; 6) The sale of PVG shares may be strategically placed with new and strong institutional hands which want large blocks of stock without going into the market to get it; 7) The sale of PVG shares may be done with little or no discount to the market; 8) The offering does not (yet) have a unit (stock) price, allowing the price to continue up at least awhile before setting a price for the first part of the offering. We don't know when the price will be set. Meanwhile, the stock continues its advance.
These were the first factors I was able to come up with on why the stock did so well today despite (or because of?) news of the offering. Any comments, pro or con, or additions to the list?
TC
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