Dec 25, 2008


Normally when a publicly traded company wants to issue more equity, they call up their investment bankers and put together a large follow-on offering. The stock price usually declines when this is announced since analysts interpret equity issuance as a sign that management believes the stock is overpriced (rational managers buy back their equity when it's cheap, issue more then it's pricey).

The equity markets being what they are right now, some firms are turning to dribbles to issue small amounts of equity without all the fanfare associated with a follow-on offering. This avoids depressing the share price due to a rapid increase in supply, allows the firm to be a bit more squirrelly with its disclosure, and gives the firm more control over the timing of share sales since they blend in with the normal trading activity.

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