Q: Hi team,
Is the 10% drop in PRL shares a buying opp today? As usual in the market these drops make little sense mathematically speaking the offer of 100 million in shares on a company with over 1 billion market cap should theoretically not drop all the way back to offer price . Same thing happened to HPS a couple days ago. If the deal was good; which no reason to doubt it won’t be if you trust the company , then it seems like a gift to buy shares in the dip on days like today. Or what am I missing here ?
Thanks ,
Shane
Is the 10% drop in PRL shares a buying opp today? As usual in the market these drops make little sense mathematically speaking the offer of 100 million in shares on a company with over 1 billion market cap should theoretically not drop all the way back to offer price . Same thing happened to HPS a couple days ago. If the deal was good; which no reason to doubt it won’t be if you trust the company , then it seems like a gift to buy shares in the dip on days like today. Or what am I missing here ?
Thanks ,
Shane
5i Research Answer:
Not much; shares nearly almost always drop on a financing, as investors sell in the market and try to buy at a lower price. It does not always work, and some investors will not get the allotment in the financing that they want. Over time, the attractiveness of the acquisition generally results in the shares making a recovery. The acquisition for PRL is accretive, and that should win the day, over time. But PRL had run very hard recently and is still up 115% YTD, so some investors like to take profits on short term moves.