Encore Prints More Money
BY EDITOR, NOVEMBER 3, 2003
There are two ways to print money if you are a private citizen; counterfeit it – and we all know where that leads – or print stock certificates. Encore announced that it intends to print another 7 million shares. That is roughly $50 million at today's prices. Some insiders also announced that they are ready to sell and tacked on another 6.5 million to the total. It was just 3 months ago that the company completed the sale of 10.6 million shares.
Encore's share count has been rising. In mid-2002, the company reported 10 million fully diluted shares outstanding. Last June, the number had risen to 26.6 million fully diluted shares. With the September offering, the number rose to be closer to 37 million. With this offering, the number rises, we estimate, to roughly 44 million. Of course, it is a shelf registration so theoretically, the shares may not be issued.
Why all the shares? To pay off debt... but ultimately, to fund an acquisition strategy, which has been management's stated goal for a while. Encore's current market cap is $240 million. That is roughly 2x its revenues and 76x this year's EPS. With so many new shares moving into the market, all we can say is, it better be a great purchase.
