CEO Zhenggang Wang said:
We believe this new sale of China 3C’s equity will enhance shareholder value by providing the company with a cash infusion that will enable it to pursue certain business opportunities in China that are currently being considered by management. Although the sale price of the shares was at a discount to the current trading price of the company’s common stock, we believe that management’s ability to act swiftly to negotiate this transaction without the assistance and associated fees of a placement agent demonstrates the company’s desire to maximize the benefits of the capital investment in light of a discounted sale price.
I disagree. The action, in my opinion, can only mean one of three things:
That management was not savvy enough to negotiate a better deal; That management feared it could not sustain the stock price long enough to lock in financing at a more reasonable discount; or That management does not have shareholders’ best interests in mind. I am currently long CHCG.OB, and do not like this move at all.
2. Air Industries [AIRI.OB] and Paragon Technologies (PTG) were both up big on Tuesday. I didn’t see any news or SEC filings to explain either move. If you know why, please comment or drop me a note.
3. Paul Kedrosky is calling the Answers.com (NASDAQ:ANSW) purchase of Lexico a land grab for the generic domain names dictionary.com, reference.com and thesaurus.com. I agree that the names have value, but by any metric Answers.com overpaid.