Published:December 2nd, 2010 11:23 EST by Bruce Calder
UR-Energy - Make An Easy 20% Today *
UR-Energy (URE) opened at $2.28 yesterday shot up to $2.49 - almost 10% on the day before dropping like a rock to $2.17 before closing down 3 cents on the day.
What the heck happened?
Unless something happened that I don`t know about (and that`s always a distinct possibility) then it can only be yesterday`s news release which announced that employees had exercised 2,400,800 stock options at $1.25 raising $3 million dollars. Good for them! Buying a stock for $1.25 that`s worth $2.17 is a good deal.
I imagine this spooked shareholders a bit who are terrified by the word "dilution" - when a company creates new shares out of nothing and sells them, often making existing shares worth half overnight.
This company had almost 99 million shares outstanding which means that all else considered equal, this employee stock option deal only creates 2.5% more shares in the company, which SHOULD only make existing shares worth 2.5% less than on Monday. I suppose it`s quite likely that when these shareholders are able to sell them on the open market (there`s no indication of any mandatory holding period but often it takes a while for things to move through the system and find their way into somebody`s brokerage account), some will be sold immediately which could depress share price of the company for a little bit.
Regardless, I`m holding and it seems like a no-brainer that buying in today will make you an easy 20% profit - maybe much much more. I wouldn`t be surprised if this gets back near $2.50 today so don`t doddle.
Here are today`s Insider Trading Reports. Except for changing a sell price or two, I`m holding pat with my existing orders
* Invest at your own risk. This is not a guarantee. Etc. etc.