December 13, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Harbinger Group (NYSE: HRG ) appeared to be foreshadowing their own demise today, falling as much as 27%, after the holding company, which specializes in various types of batteries, said that a group of shareholders is selling as much 25 million shares, or nearly 20% of the company.
So what: Those selling include Harbinger Capital Partners Master Fund I Ltd., which owns 51 percent of the company, and plans to sell about a fifth of its stake. The other groups selling include Harbinger Capital Special Situations Fund and Global Opportunities Breakaway, in a process that amounts to a form of a secondary offering priced at $7.50 a share; but it will not dilute shares.
Now what: The $7.50/share price seems a bit odd, considering the stock was trading above $10 yesterday. This could simply be profit-taking on the part of the major shareholders, as the stock has more than doubled from its value in May, and individual investors should be reassured by the fact that Harbinger Capital Partners Master Fund is still retaining the vast majority of its stake. Either way, it seems a strong possibility that the share price will resume its northerly direction after the secondary sale.
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