Dendreon Tames Short Sellers, Transforms Itself into Old-School Buy-and-Hold Stock
(Page 2 of 3)
“Having an investor base that wants to work with you is valuable—having a long-term, focused shareholder base supporting the company is important for meeting capital needs,” Schiffman says.
The results of this effort to tame the Dendreon shareholder base have been striking so far. Volatility is down since the Deutsche Bank financing closed on May 13. Shares have steadily climbed from $20.46 that day to $25.49 at yesterday’s close. More than 21 million shares of Dendreon were held in a short position on April 15, out of 100 million shares outstanding in its most recent quarterly report. The number of shares being sold short was almost cut in half over the next two months, down to about 12 million shares, according to data compiled by NASDAQ.
Trading volume has come down quite a bit as well. About 9 million shares a day of Dendreon changed hands over the past three months, but that has dropped to 6 million in the past 10 trading days, according to data compiled by Yahoo Finance. That’s still providing enough liquidity so that big investors can get into a stock without driving up the stock price—an important feature to many blue-blooded funds—but isn’t anything like the superheated environment of the past two years. It was so wild in 2007 that Dendreon, a little company of 200 employees with no products on the market, was the second-most traded biotech stock on the entire NASDAQ that year, behind Amgen, the world’s largest biotech company, which had more than $14 billion a year in revenue.
One of the curious byproducts of this transformation is that Dendreon is now getting a lot higher-caliber questioning from investors. Instead of spending hours of meetings … Next Page »