Posted by johntmh > 2011-04-20 06:49 | Report Abuse

What does this mean? Is it good or bad?

Posted by William Huang > 2011-04-20 17:41 | Report Abuse

Generally, private placement means the company's fundamental is poor, hence they need additional cash to fund some projects, expansion plan or operating costs.

Over the long term, this excercise will dilute earnings which lead to lower valuation of the company and will bring the price down.

The only exception is if the private placement is to fund some projects with lucrative returns or extraordinary purchases, which is unlikely in most cases.

Posted by beginner > 2011-04-20 23:14 | Report Abuse

meaning short term will not have any uptrend for this stock ?

Posted by William Huang > 2011-04-21 10:04 | Report Abuse

Anything can happen to the stock price for short term.

It just means that I won't keep this stock for long term investment unless I know that the company is using the money for high return investments.