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Saturday, March 6, 2010

Raise Capital - ATM


A sign of the times - companies are raising smaller amounts of cash needed with "at the market" stock offerings.  This offers a number of advantages over standard issue equity offerings that raise large amounts of cash including:
  • Sell when the market is right and/or when a cash injection is needed
  • Low cost - each issuance small and priced @ market
  • Strategic - company can choose when to issue shares
  • Ability to keep shares out of the hands of undesirable investors - i.e. big activist hedge funds

As Warren Buffett states, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”




Reference:
CFO

Strategic Corporate Finance: Applications in Valuation and Capital Structure (Wiley Finance)