Wednesday, June 22, 2011

Dahlman Rose Lowers Price Target on Molycorp; Corporate Officers Were Among Selling Shareholders in Recent Secondary (MCP)

"...We mutually pledge to each other our lives, our fortunes, and our sacred honor."
Not.
I'm not sure why I thought of the last fourteen words of the Declaration of Independence  when putting this post together but, well, there you go.
From Benzinga:
UPDATE: Dahlman Rose Lowers PT on Molycorp to $120
Dahlman Rose is out with its report today on Molycorp (NYSE: MCP), maintaining Buy.

In a note to clients, Dahlman Rose writes, "We continue to view MCP shares as the best vehicle to participate in the rare earth industry. Even in a much lower rare earth price environment, we believe that the company can generate outsized returns. That being said we are modestly decreasing our price target to $120 from $125 to account for the additional dilution created by the convertible security"...
Dahlman has been part of the distribution on the IPO and both secondaries.
With a half-hour to go before the open  the stock is off a quarter at $52.80.
I'm not sure why I'm bugged by officers selling in the secondary, it was in the prospectus, but I am.
Here's SECForm4:

Common stock purchase or sale:
Transaction
& Date
Reported
Date
Company Symbol Insider
Relationship
Shares
Traded
Average
Price
Total
Amount
Shares
Ownership
Filing
2011-06-15
Sale
2011-06-17
5:19 pm
Molycorp, Inc. MCP Burba John L.
(Executive VP and CTO)
85,757 $51 $4,373,607 223,505
(Direct)
View
2011-06-15
Sale
2011-06-17
5:17 pm
Molycorp, Inc. MCP Ashburn John F. Jr.
(EVP and General Counsel)
68,604 $51 $3,498,804 184,252
(Direct)
View
2011-06-15
Sale
2011-06-17
5:15 pm
Molycorp, Inc. MCP THOMPSON JACK EDWARD
(Director)
27,823 $51 $1,418,973 69,195
(Direct)
View
2011-06-15
Sale
2011-06-17
5:12 pm
Molycorp, Inc. MCP Henry Charles R
(Director)
69,000 $51 $3,519,000 65,401
(Direct)
View
2011-06-15
Sale
2011-06-17
5:10 pm
Molycorp, Inc. MCP Bhappu Ross R.
(Director
10% owner)
5,747,883 $51 $293,142,033 13,843,863
(Indirect)
View
2011-06-15
Sale
2011-06-17
5:08 pm
Molycorp, Inc. MCP Smith Mark A.
(President and CEO
Director)
174,915 $51 $8,920,665 774,318
(Direct
Indirect)
View

The Private Equity guys selling I understand. As someone once said "Private Equity is neither private nor equity" The PE selling is also at the Form4.
Here's Warren Buffett on Private Equity:
"You can sell it to Berkshire, and we'll put it in the Metropolitan Museum; it'll have a wing all by itself; it'll be there forever,'' he says at the February meeting. ``Or you can sell it to some porn shop operator, and he'll take the painting and he'll make the boobs a little bigger and he'll stick it up in the window, and some other guy will come along in a raincoat, and he'll buy it.''
Here's Barron's Inside Scoop:
Molycorp CEO's $8.9 Million Sale 
Molycorp's top executive mined into the company's recent high and cashed in some shares on a selling spree.
On June 15 and 16, President and Chief Executive Mark A. Smith sold 174,915 Molycorp (ticker: MCP) shares for $8.9 million, or $51 each.
This is Smith's third sale of the year of shares of the miner of rare earths. On Feb. 16, he sold 72,700 shares for $3.6 million, an average of $50 each, and followed up on March 16 by selling 11,600 shares for $579,800, also an average of $50 each.

Following this transaction, Smith continues to own 774,318 shares directly and 153,433 shares indirectly through his spouse. His direct holdings represent less than 1% of Molycorp's outstanding shares.
Smith has been CEO since 2008 and president since 2010.
Molycorp did not respond to a phone call seeking comment on the transaction.

Ben Silverman, director of research for InsiderScore.com, says, "From a shareholder's perspective, I kind of wince. That said, the company has been public for less than a year and now sells at [a gain of] 300%."
Shares of Molycorp reached a high of $79.16 on May 3, but have backed off since then, closing at $52.80 on Monday.

"If an analyst has an $87 price target and these guys are selling at $50, there's a big disparity between what analysts are forecasting and where insiders are selling. So, somebody's wrong," he says....MORE
Recently:
J.P. Morgan Raises Estimates, Price Target on Molycorp; Piper Raises to Overweight (MCP)
Molycorp Final Prospectus and Some Thoughts on the Insiders Selling (MCP)