Why Harbinger Group Shares Tumbled

Jeremy Bowman, The Motley Fool
Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of HarbingerGroup appeared to be foreshadowing their own demise today, falling as much as 27%, after the holding company, which specializes in various types of batteries, said that a group of shareholders is selling as much 25 million shares, or nearly 20% of the company.

So what: Those selling include Harbinger Capital Partners Master Fund I Ltd., which owns 51 percent of the company, and plans to sell about a fifth of its stake. The other groups selling include Harbinger Capital Special Situations Fund and Global Opportunities Breakaway, in a process that amounts to a form of a secondary offering priced at $7.50 a share; but it will not dilute shares.


Now what: The $7.50/share price seems a bit odd, considering the stock was trading above $10 yesterday. This could simply be profit-taking on the part of the major shareholders, as the stock has more than doubled from its value in May, and individual investors should be reassured by the fact that Harbinger Capital Partners Master Fund is still retaining the vast majority of its stake. Either way, it seems a strong possibility that the share price will resume its northerly direction after the secondary sale.

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The article Why Harbinger Group Shares Tumbled originally appeared on Fool.com.

Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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