Wednesday, March 24, 2010

NetLogic MicroSystems (NETL) Offers 3.2M Shares; Another 2.7M Being Dumped by Former Acquisition Target

My gosh, the stock issuance parade is on overdrive as the nearly free money from the Fed is quickly moving from the investment banks and its way into the hands of our corporations - Ben's master plan is working wonderfully.  Sacrifice the savers so the borrowers may thrive; thankfully most savers are completely in the dark of what the Fed is or how it works.  Sheeple power.

This has to be the first time I've seen a stock SPLIT its shares (Monday!) and than do a share offering within a week's time.   But that is what NetLogic Microsystems (NETL) has done.  What a market.
  • NetLogic Microsystems, Inc. plans to offer 3.2 million shares for sale, according to a news release issued Tuesday. 
  • The company also said former shareholders of RMI Corp., which the company bought last year, plan to sell 2.7 million shares. The company will not receive any proceeds from the sale of shares by the selling stockholders.
  • NetLogic Microsystems, which makes processors used in Internet and corporate networking equipment, said it will grant the underwriters the option to buy about 885,000 more shares to cover overallotments.
This is the 2nd stock in a week we just bought which within hours/days issued shares.  I guess the new policy is to buy the shares on the announcement since stocks only go up on share issuance in the new paradigm market (Massey Energy for example is up 4% today).  Unlike Massey there are shareholders also dumping their shares along with the 3.2M shares being raised for internal purposes.   Effectively a 3.2M share dilution along with 2.7M share hitting the open market versus being in 'strong hands'.  NETL had 57.5M shares.

I only had a starter position of 0.4%ish in this case, so I will buy some more NetLogic on the news, as the stock driftly perfectly to the 20 day moving average.  I'll layer on a 1% allocation here and I guess in the George Costanza market ("whatever decision I make, I will do the opposite - with great results"), NETL will rally on the actual dilution.  This is completely backwards to how I'd normally do things...

Long NetLogic Microsystems in fund, no personal position


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