How to Invest in a SLURPEE stock
I'm coining a new Investment Phrase..... From now on any stock in the stock market that is "planning" to issue a secondary offering and a date has been set....even if a price has not...is a SLURPEE stock.
It works like this.... When you go to buy a Slurpee....a lot of unpleasantries occur before you can finally enjoy the slurpee...
A) The flavor(s) you want almost always are nearly sold out. So you have to bang the squirter as hard as you can to crank out enough of the good stuff into your cup.
B) Then you locate the straw only to discover it packaged tightly in an ever annoying plastic material....rip, claw, bite, several hours later you manage to get the straw out only to stupidly put the thing into your slurpee the wrong side down.
C) Now you fish out the straw, rotate it around, and plant it correctly....only to discover your hand is now gooey and covered in SLURPEE Sugar Goo...not to mention freezing from the cold gooey SLURPEE gunk.
D) Then you have to fish out your wallet and pay an exhorbident price for your slurpee after waiting in line for next to forever behind an old lady complaining she can't get her gas pump to work.
E) Finally!! you can now enjoy your darn SLURPEE.
Compare that with a secondary offering of common shares to your beloved investment stock.
First the share price slowly dives...crumbles....then the price is revealed for TOMORROW's offering and you see your share price collapse downard....destroying hundreds if not thousands of dollars of VALUE in your stock.
Then....you face the same thing on the day the secondary offering is purchased as your share price matches or even falls below the secondary offering price.
The next trading day might be NEXT WEEK.. so all weekend long you are pulling your hair out crying about what happened to your precious investment like a little baby.
But...next week on Monday something magical happens.... the share offering madness is over and now your share price begins to quickly recover the losses...In fact..in a few short trading days/couple weeks....the share price may have even exceeded higher than where it was before your stock announced the decision by the Board to issue new COMMON SHARES....
Yes... you have a profit once again...post share dillution and can kick back enjoying the fact that your company is expanding their business greatly off the proceeds of the secondary sale.....totally more than offsetting the share dillution problem through increased earnings/revenue/profit.
And that's what happened when (F) Ford a stock I own had it's 2009 SLURPEE episode.
Now (SVA) is in SLURPEE mode.......shares will be issued out tomorrow...*sigh*
DISCLOSURE: I own shares of SVA and FORD
P.S. SLURPEE... Because people/entities/funds will be SLURPING up the secondary offering of shares.