Western Asset off 5% after large secondary


You knew this one was coming given the premium to book value the stock was trading at: Western Asset Mortgage (WMC) is off 5.1% in premarket action after a massive 13M share secondary offering that will boost the float by more than 50%.

Along with the offering, WMC will issue and sell in a private placement common shares to its manager, Western Asset Management Company. The number sold will equal 5% of the total sold in the public offering, subject to a maximum purchase price of $10M.

The company estimated book value per share of $15.18 at the end of February. Prior to the offering the shares closed at $15.44 last night after falling sharply over the past couple of weeks - maybe as smart investors cashed in ahead of what they knew to be an imminent sale of stock.

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Comments (4)
  • brucemorganmba
    , contributor
    Comments (3) | Send Message
     
    What will be the long term effects from this offering?
    4 Apr 2014, 10:24 AM Reply Like
  • jeffc42
    , contributor
    Comments (9) | Send Message
     
    The increase in float is huge, but consider: all that money can be invested at the current wide spread.

     

    It will also substantially increase the management fees that are collected, but I'm sure that thought never entered their minds :)
    4 Apr 2014, 12:13 PM Reply Like
  • DAVE22Q
    , contributor
    Comments (414) | Send Message
     
    I think that in general investors who do not bail on the announcement were ok by the next dividend. Have not had time to verify this impression. the real proof will be in the ability to maintain or expand the June dividend.
    4 Apr 2014, 01:09 PM Reply Like
  • JIMSK
    , contributor
    Comments (137) | Send Message
     
    will the monies be used to restructure their debt load , and anticipate higher interest rates ??
    and
    how long will this company be able to run with a negative eps
    i would think somr kind of dividend restructure is in order
    jim

     

    but i could be wrong
    5 Apr 2014, 09:20 AM Reply Like
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