JL: Killing the golden goose to get the eggs.

CASH: You got it, Aesop.

JL: Switching tracks here… Last I recall, you were pretty psyched about the potash company last week. Does anything ever happen at the last minute to change your opinion, cement your resolve, or otherwise alter the situation?

CASH: Funny you should ask. You’d be surprised how the terms change on these deals, right up to the day before they issue the shares. Intrepid Potash Inc. (IPI:NYSE) is actually a great example. Let me walk you through the timeline…

JL: By all means.

CASH: On April 7, the terms were set for the deal. They guided for 24 million shares to be offered in the $24-26 range. That’s $576- $624 million (before fees), for those keeping score at home.

JL: Ok, so we have the number of shares and the expected price at this point. The amount of capital raised is the number of shares times the issue price.

CASH: Yep. So three days later, on April 10, the timing was set. The expected offer date became April 22.

JL: Got it — so that’s basically all the info necessary to make the deal happen, right?

CASH: Right. But remember, these deals aren’t set in stone until the opening bell rings and the stock actually starts trading. There’s flexibility to adjust the terms based on feel for market conditions and demand. So a week later, on April 18, the underwriters increased both the number of shares being offered and the price range. Now the company would be offering 30 million shares at a range of $27 to $29.

JL: I can do math with the best of them. Let’s see, carry the one…

CASH: We’re now talking $810-$870 million dollars before fees. Don’t hurt yourself.

JL: Hey! I was just about there.

CASH: Sure you were. But in all seriousness! They increased the size of the deal by over $200 million. That’s a big number, even in Cash McDash land.

JL: Indeed. $200 mil is nothing to sneeze at. And so now IPI is trading… from what I saw and read, it looks like the Intrepid Potash deal was a big success. How did you fare?

CASH: Not too shabby. It’s hard to complain when you make a good call and catch 57% gains in ONE TRADING DAY because of it. You can never get enough of the good ones.

JL: Did you get enough shares to make it a decent-sized trade? I imagine this thing was pretty tight, what with the hotness of potash these days.

CASH: Yeah, I got a decent allocation from Morgan Stanley. My guys at Merrill shut me out, though.

JL: Uh-oh.

CASH: Yeah, I’m not pleased about that at all. After calling my Merrill guy three different times, he really and honestly convinced me there was no stock for him to give me. His manager is probably tired of him whining by now over losing his best client.

JL: Losing his best client… You mean you fired him??

CASH: Well, that’s what he’s going home thinking tonight. I’ll kiss and make up later, but I wanted to send a message. My beef isn’t really with him — it’s with management thinking they can shut me out like that. But the only way to get into the manager’s head is to threaten to leave. I’ll bet you they find at least a couple hundred shares for me on the next hot deal.

JL: Gotta play that game, eh? Like in billiards or something. Always setting up for the next shot.

CASH: Whatever it takes, man, whatever it takes. But bottom line, I’m pleased. I got some decent stock, it traded just like I thought it would, and my investors got a nice pop to their equity despite a triple-digit loss for the Dow on that same day.

JL: Glad to hear it. Well, good luck with the American Waterworks deal, too. I know that’s coming up for you here.

CASH: Thanks! Speaking of which, gotta hop. The allocations are already coming in.

by Justice Litle, Editorial Director, Taipan Publishing Group

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