Wednesday, November 18, 2009

Similar sales, different reactions (GHL, CML)

Press releases announcing that existing shareholders plan to sell shares usually cause the stock price to drop. Partially due to large volume of selling, and also due to the signal it sends to other investors -->> these insiders are selling, do I want to be buying?

Among many firms that announced sales by existing shareholders today, Greenhill(GHL) is down and Compellent (CML) is up.

The only reason I can come up with for Compellent shares to be up on the day is possible excitement around new shares available for investors. Unlike firms with 1billion or more shares, there are only 31million Compellent shares outstanding, and over half of those are held by insiders. These insiders are only selling about a fifth of their holdings, so there's the double-positive of new liquidity and a still-motivated management team invested alongside other equity holders.

From the release:

EDEN PRAIRIE, MN--(Marketwire - 11/18/09) - Compellent Technologies, Inc. (NYSE:CML - News) announced the pricing of its public offering of 3,340,000 shares of its common stock at a price of $19.25 per share. The shares of common stock sold in the offering include 100,000 shares sold by Compellent and 3,240,000 shares sold by existing stockholders. Compellent has granted the underwriters a 30-day option to purchase up to 500,000 shares of common stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.

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