Diamonds and Dogs


The oils are starting to look like the banks from the financial crisis. Weatherfold International (WFT) is the dog of the day down 17% following the announcement of a $1 billion debt/equity offering. The stock has been on a steady decline down 60% since last October. The debt/equity offering is for acquisitions, but with a market cap of just $6 billion and over $7 billion in debt, the company may need to focus on surviving and not betting on an acquisition since they can't even make money with oil at current levels. Expect to see more oil related companies raising equity and debt, thereby diluting current shareholders to survive this oil lump.

Cashing in their chips. Chip company, Atmel (ATML) is up 12% after agreeing to be bought out by Dialog Semiconductor (DLGNF) for $4.6 billion cash-and-stock deal.  Dialog is levered to Apple and with the acquisition of Atmel, the company will be able to expand away from Apple into other industries. Even with the 12% pop, Atmel's stock was much higher in July and June. Maybe they should hold out for a better price or do they know something we don't?

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