I have been exchanging emails with an individual that manages a PF including a huge chunk of AUM shares. This person had suggested to me that AUM should have been doing a buy-back of stock, just to send the message that the share price was stupid-cheap, to support the market, and draw a line in the sand against the shorts. For a company that is not raking in huge cash flow, I do not support a buy back, but I could at least see the short term benefits to such a plan and the need to demonstrate some confidence for the market.

The share offering today has instead done exactly the opposite. We already knew Sentient was going to buy more stock to maintain their ownership level, which in itself was bullish. AUM did not have to do a deal now, and if so, not at the lowest possible price. Look u the chart for the stock, circle date the price was based on. Is this a great decision for the current shareholders? What message does this send?

An opportunity was lost. AUM could have stated, we will do this deal at $8. It would have represented a modest increase to the current share price, but not a huge extra amount of money for a fund that is getting a huge discount on the average trading price since the merger announcement. It would have roasted the shorts because there would have been stop-loss buying as soon as the market priced in this deal.

Again, I point out that I have been around the markets long enough to know that the vast majority of all deals are priced to benefit insiders. That is how business is done, and if you want to put money in the markets you accept that as part of the reality. Good companies will still price a placement at a discount, but you can look up the trading history and see that the time to raise money is when the stock is at a premium, not when its at the oversold low point of a correction. Unless you absolutely have to get the cash, you say no thanks, this is not the right time for the transaction. Come back to us when we get more value for dilution of this deal.

I am very bullish on this company. I am extremely disappointed with this deal as it has been structured, and that management is so tone deaf to the optics, and the missed opportunity to punish shorts.

cheers!

mike