Wednesday, August 5, 2009

PTF (perusing the filings) - HCP, IDIX, MNKD

AlphaNinja - Last night, healthcare REIT HCP Inc (HCP) reported earnings (or FFO, for this type of company) above consensus, and guidance was ahead of what the street had expected.

Also last night, HCP announced intentions to sell 11.5million common shares, which it did today at $24.75 per share -->> a significant discount to last night's closing price. The lower price is likely because the offering was increased to 15.5million shares, and could reach nearly 18million shares if banks exercise overallotments.

Part of the funds will be used to pay for the cash portion of an opportunistic investment announced just a few days ago:

LONG BEACH, Calif.--(BUSINESS WIRE)--HCP (NYSE:HCP - News) announced that it has purchased a $720 million participation in first mortgage debt of HCR ManorCare at a discount for approximately $590 million. The $720 million participation represents 45% of the $1.6 billion most senior tranche of HCR ManorCare’s mortgage debt which bears interest at LIBOR plus 1.25%. HCP obtained favorable financing to fund 72% of the purchase price, resulting in a net cash payment by HCP of $165 million. HCP expects that the participation will have an effective unlevered internal rate of return of approximately 13%.

The stock offering is not unique among REITS, who've been selling shares FURIOUSLY as their stocks have run up -->> nice to see what looks like a good use of capital.
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Idenix Pharmaceuticals (IDIX) shares are off 14% -->> that's what you get when you offer shares for 15% lower that the previous close. 15% lower than poor saps who bought shares in the open market yesterday.

The company already had $50million in cash, and judging by the chart, they're not taking advantage of a recent run-up in the stock price. They're burning through $14-15million per quarter, and look to be desperate for raising cash, despite the low stock price.
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Mankind (MNKD) is selling 7.4million shares, and the stock is off 9%. They need the money as their cash pile dwindles, and timing couldn't be better, with the stock at 52week highs.

The positive here is the vote of confidence from the CEO and Chairman, who is purchasing 1million of those shares:

VALENCIA, Calif.--(BUSINESS WIRE)--MannKind Corporation (Nasdaq: MNKD - News) today announced the pricing of the public offering of 7,400,000 shares of its common stock. MannKind’s chairman, chief executive officer and principal stockholder, Alfred E. Mann, is purchasing 1,000,000 of these shares from the underwriters. All of the shares are being offered by MannKind. MannKind expects the offering to close on or about August 10, 2009, subject to customary closing conditions. In addition, MannKind has granted the underwriters a 30-day option to purchase up to an additional 960,000 shares to cover over-allotments, if any.

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