Wednesday, February 11, 2009

Insituform Technologies (INSU) Prices 9 Million Shares @ $13

Insituform Technologies (INSU) announced the pricing for the shares they are floating to fund their 2 acquisitions; the price is actually quite poor - way down at $13. The stock is under pressure this morning - we are taking a bath on the small position we do have (0.9% stake at this time) and this is why we cut back positions once they break support. In yesterday's piece on this company [Feb 10: Insituform Technologies with Favorable Mention in Investor's Business Daily]

When the stock broke below a key long term support the next day I actually cut back this position in half [Feb 3: Stopped out of Half of Insituform Technologies] and we're kind of in limbo here. The 200 day moving average is around $16.60s and the stock has reached that level intraday three of the last four sessions before retreating. So I cannot commit more dollars here and a case could actually be made for shorting it until it jumps back over the 200 day.

Because the stock made such a huge run (much of it on stimulus hope) we don't have much in terms of support if we begin to break down. In fact,
if $15 breaks you could see this back down to $12 to $13 in a jiffy.

In retrospect I guess I should of listened to myself and followed through on the short side to hedge myself. Obviously this is a completely broken chart but I'll begin to add down there in the $12 to $13 range. If it falters down past $11 we'll be compelled to cut back though. Pre market we're in the $13.60s and I'd expect something close to $13 relatively soon. This won't be a quick "rebound" type of stock but a compelling valuation if we can get those price points.
  • Insituform Technologies Inc (INSU), a provider of technologies and services for repairing underground piping systems, said it will offer 9 million class A common shares at $13 apiece for net proceeds of about $111.2 million. The offer price represents a discount of about 9 percent to the stock's Tuesday closing price of $14.22.
Long Insituform Technologies in fund; no personal position

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