PIPE Resales

Filed in archive Hedgetalk on February 5, 2008

On febuary 15th, 2008, a reduction in the Rule 144 holding period for restricted shares of public companies will take effect. The holding period, which is being shortened from one year to six months, will result in billions of shares from thousands of companies becoming eligible for public resale on that day.

A new report by Restricted Stock Partners examines 300 transactions and 258 issuers, showing 66% of the issuers highlighted as having greater than three months of their average daily trading volume eligible for sale on Febuary 15th.

The report is based on research on companies that issued unregistered securities in connection with Private Investment in Public Equity (PIPE) deals during the affected period. Hedge funds are the primary investors in the affected shares, many of which are from PIPEs.