Shares of Forterra (NASDAQ:FRTA) plunged as much as 14.4% in trading Thursday after announcing the pricing of a stock sale. The stock didn't recover much from lows and was still down 11.8% for the day at 3:40 p.m. EDT.
The company announced the sale of 10 million shares of Forterra stock at a price of $13.50 per share, below yesterday's closing price of $14.61 per share. This is notable because the offering didn't go to Forterra itself, but was rather a sale by the company's largest shareholder, Lone Star Funds. That sale is what's driving the initial slump in the stock, but clearly shares fell below that, hitting as low as $12.50 per share today.
When a big stockholder sells a big portion of stock, investors should take notice. Maybe their investment thesis changed or they need to raise cash, but if they're abandoning a stock then investors should reconsider if their thesis has changed as well.
This sale doesn't fundamentally change Forterra's operations at all, so investors shouldn't panic sell. But the idea that a large shareholder is selling its stock is notable. It's important to note, however, that the sale happened at nearly four times the price of the stock's 52-week low, so this may just be opportunistic selling for Lone Star Funds.