Sunday, February 18, 2007

It's A Beauty

I'm not usually one to be looking at cosmetics companies for trading ideas but I came across a story on Bare Escentuals (BARE) today that is causing me to put it on my watch list - this stock announced a secondary offering of 12 million shares. Currently it has about 89 million shares and they are going to increase that to 101 million shares. If I've done my math correctly that means that the current 35 dollar price should drop to about 31 dollars on Tuesday just because of the dilution to value being caused by this offering. I'm probably not going to buy this stock ever but I have to ask - given a chart like this -

What possessed them at this point in time to add to the share base? And exactly how is this in the best interests of share holders? Especially since the company itself is only offering a half a million shares and "selected" stockholders are going to release the other 11.5 million.

I'll keep an eye on it and if it starts to turn around like LQDT I might try to scalp a few cents from it - but the big difference here is that LQDT was a healthy company to start with - this one looks like it needs some of the product it sells - of course there is the old saying - you can put lipstick on a pig but it still is a ...


TradingGoddess said...

As I have been BARE for a while now, I'd like to know what possessed them as well!!!



Beaty and the beast.