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Thursday, November 18, 2010

Sterling Returns, and Nearly Disappears

Updated below.
2nd update, below.

Well, it returns to my attention (aided by a reader's prompt). When last we visited with our Sterling Bank and its owners, several months ago, it had just got a second passel of money from private investors (Pinkus, Warburg, as I recall), and the FDIC had taken it off its bad bank list, and happy days were here again. And its stock was poking along in the $.50-.65 cent range, with daily little ups and downs. And there was no particular news of any note.

And then. This past Monday morning, upon no news, a very big sell-off happened--millions of shares--cutting the stock's price in half; down to $.25/share. Millions of shares suddenly were dumped on the market. No news to account for this, either Monday or Tuesdya or indeed on Wednesday or Thursday, either. Now, the stock is just meandering along around $.24-.25. Too strange!

I went poking round the Net, found a little information and a little speculation there. In the options arena, there are more investors interested in buying than selling, which makes it sound like the company was still seen as okay. Some folks, on financial chat boards, were speculating that the earlier Sterling private equity investors, Lee and company in Boston, might just be dumping some of its late spring investment, which bought a lot of shares for $.20/share, and was now taking a nice little 20 or so % profit over six months by selling, even at the $.25/share level.

The strangeness of capitalism. Sterling Financial is worth half of what it was worth last Friday, even though nothing essental appears to have happened. Although its capitalization level still looks good, I think.  But I am no master of the economy.

However, although I follow Sterling and Banner fates just because they are our local banks, I did discover yesterday that Vanguard holds a couple of million shares of Sterling in its Market Index Fund and its Extended Market Index Fund, so in a very small way, I, too, am a Sterling shareholder and thus affected by these moves.  Maybe you, too.

Thursday: The tubes were a little slow in getting the news up, but Sterling announced this morning  that it was having a reverse stock split, in which every 66 shares of Sterling would, Friday morning, turn into 1 share of Sterling.  I look forward to seeing the trading price of those now very fat single shares tomorrow a.m.

Friday: Opened at $15, closed at $16.50, 35,000 shares traded.  These new fat shares are fairly close in price to the $.24/thin share.  (multiply .24x66, on a 66/1 split).

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