Omphalos: As CEO explained in his last post, it's all about the volume of deal flow. Don't confuse what these funds do with investing, because that is not their goal.
As I am sure you are aware, the "institutional investors" that baseball fan was so kind enough to provide us with, are all funds whose raison d'etre is to participate in PIPE deals. Along with the investment banking firm (Rodman) that LS chose to underwrite Cryoport's follow on offering, these investment funds are among the biggest whores in the industry.
They are not focused on the fundamentals, current operations, or potential for the future growth of the company they are investing in, rather than technical aspects such as the float, volatility, and volume and liquidity of the company's stock. Most importantly is how the PIPE will be priced (discounted), and if there will be warrants attached to the deal.
As CEO explained, it is the "law of large numbers" at play; it's about doing as many deals as possible with the biggest edge they can negotiate. Whether any of these funds hedged themselves by selling the stock short is open to debate, but as CEO contends, the deal was done at a big enough discount to the current market price, to both make the deal more attractive to investors and to make short selling of the company's stock less attractive. Either way, no matter whether the PIPE is structured to provide price protection to the investors or not, the company's common stockholders are still subject to the risk of significant dilution, and a decline in share price.
Bottom line, is that if a company and it's CEO are willing to commit to financing their company through a PIPE transaction with these kind of funds, then they have desperate capital needs that can't be achieved through more traditional financing, and should be prepared to pay the price.
"You don't have to put on the red light"...but you probably should, because "you don't care if it's wrong or if it's right"
Brio Capital LP
AQR Diversified Arbitrage Fund
CNH Diversified Opportunities Master Account, L.P.
AQR Opportunistic Premium Offshore Fund, L.P.
MOG Capital, LLC
Hudson Bay Master Fund Ltd.
Cranshire Capital LP
Iroquios Master Fund Ltd.
Blue Earth Fund LP
AQR Absolute Return Master Account,
Freestone Advantage Partners, LP
Octagon Capital Partners
PRU VA Diversified Arbitragh
