Manulife Financial Corp. (MFC.TO) announced Wednesday that they have sold another $2.5 billion in stock and Donald Guloien, President and Chief Exectutive Officer, describes the move as a creation of “fortress levels of capital.” Just in case you haven’t followed the Manulife storey, here’s a little update:
- Only 12 months ago Manulife sold another $2.275 billion in stock
- Manulife has suffered massive loses during the down leg of the recession since much of their balance sheet was tied up in equities.
- Manulife seems to have become conservative right as the market began to recover and as a result they were not able to recuperate as much of the losses as shareholders would have liked.
- The big problem at Manulife was that they sold billions of dollars worth of guaranteed savings products that were invested where? You guessed it, in the stock market. As a result, the guaranteed savings products have the potential to become the mother of all catastrophes for the company.
- The wild ride on Manulife has taken stock holders from share values around $40 back in 2008 to $9.02 back in February 2009 and now back around the $20 mark.
I think it’s great that Manulife has decided to play the conservative card; I mean, shouldn’t we all expect an insurance company to be some what responsible? It’s just too bad it has to come at the cost of current share holders once again; I’m glad the knife is not in my back again this time. You did realize that this share offering is going to dilute the ownership stake of the current shareholders right?
That’s not all though. The smart money, pause for a laugh, is getting a deal on the underwriting. Scotia Capital of Scotia Bank (BNS.TO) and RBC Dominion Securities of Royal Bank (RY.TO) are the leads on this underwriting and for their efforts they have agreed to buy the $2.5 billion in Manulife common shares at a price of $19 a share. That’s a whooping 6% less than the closing price on Wednesday and if you look at Wednesday’s chart with volume you can see a spike in volume with a gap down in the late afternoon; you think this info was leaked? Don’t kid yourself if you don’t. This kind of stuff fly’s under the radar all the time; that’s why it’s called smart money.
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I totally agree. This was a clear case of insider information. Some broker dealer shorted this stock or told their clients about this. the gap down and the trading since then is really suspicious.
But of course no one will investigate this crime