DragonWave Inc. Moves to Support Its Stock Price:
It appears that DragonWave (DRWI) is fighting back against whatever forces were causing the free fall in its stock. The company announced a normal course issuer bid of "up to 10%" of the float this morning. It is always hard to know if companies will follow through on such promises, because we often see announcements like this of potential stock buybacks (i.e. X amount of authorized shares we "could" buy), but in reality they are just announcements and companies many times only buy a fraction of the shares authorized. But from a strategic point of view, it's an interesting move even if they don't follow through all the way since it shows the company has the willpower to support the stock price.
Either way it's a nice comfort to shareholders to see an engaged management. Most of the time you see executives more than happy to line their own pockets with extra cash rather than defend shareholders. Those darn socialist Canadians, thinking so different than Americans...
Via the company press release:
The Board of Directors of DragonWave Inc. announced today that it has authorized the purchase of common shares of the company equal to up to 10% of the public float by way of a normal course issuer bid on the Toronto Stock Exchange and/or the NASDAQ Global Market.
The normal course issuer bid is subject to acceptance by the TSX. If approved by the TSX, purchases pursuant to the normal course issuer bid will be made through the facilities of the TSX and/or the NASDAQ Global Market. The normal course issuer bid will be subject to the rules of the TSX and applicable securities laws, including the rules pertaining to the maximum number of shares that may be purchased in any one day.
DragonWave will pay the market price at the time of acquisition of common shares purchased through the facilities of the NASDAQ Global Market and/or the TSX. All common shares acquired by DragonWave under the normal course issuer bid will be canceled.
DragonWave is initiating the normal course issuer bid because it believes that, at certain times, the market price of its common shares may not reflect the underlying value of its business and its future prospects.
The objective of the normal course issuer bid is to provide capital appreciation and market stability for the benefit of DragonWave's shareholders. DragonWave has not previously engaged in a normal course issuer bid.
For reference, DRWI has 36.25M shares, almost all of which are floating (34.2M). 10% of the float would be roughly 3.4M shares - at today's prices this would be around $33M if they bought all 10%. A quick look at Yahoo Finance shows just over $100M in cash on the balance sheet.
http://seekingalpha.com/article/193707-dragonwave-moves-to-support-its-stock-price?source=yahoo
Here is an additional news release from March 15th that is very good news for this company:
Cosmoline has selected DragonWave as its exclusive backhaul provider for a national 4G mobile WiMAX network across Greece:
For more information, visit their website at www.cosmoline.com
http://www.dragonwaveinc.com/main.asp?id=news&page=releases&newsid=182
Here is a one month-daily chart for DRWI, and it looks to me like it's bottoming after a hard fall. That's when I usually like to enter a Swing Trade on the Long side. Here's my read of this chart, and why I think it's turning Bullish:
5MA - The share price closed above the 5 Moving Average, and closed at the high of the day.
CMF - Chaikin Money Flow (solid green), On Balance Volume (red) and Accumulation/Distribution (black), which are my three Money indicators are all upticking.
CCI - The Commodity Channel Index (dark blue) just gave my primary Buy Signal by crossing up through the -100 line.
STO - Stochastics (purple) was very Oversold below the 20 line, and is now upticking through it.
MACD - Moving Average Convergence Divergence - The MACD Histogram (light blue bars) is upticking, and so is the slow line of the MACD (red).
ADX - The DI's of the Average Directional Index (red and green) have started to pinch together again.
RSI - The Relative Strength Index (green at the bottom) is upticking sharply.
Volume will need to increase more if this stock is going to continue to move up.
I like what I see about this company's recent news and the way it's chart looks. I will be following this stock closely for a while to see how this plays out.
Happy Trading,
zigzagman
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