After dropping steadily during the last three months, they finally started to advance. This is not something so peculiar. The weird thing in the story is the moment they began their rebound. The progress of the stock started on Wednesday, the same day when Longford declared to have withdrawn its $15M bought-deal financing announced in April.
To me, (I admit, I am not a professional stock researcher) it does not sound like good news. Obviously, the offering was unsuccessful and the company is quitting its intention to secure $15M. Of course, this is not so terrible either. As Longford states in its press release, it “evaluates alternative funding proposals”. The company claims it “has received a number of financing proposals” that need to be considered.
Still, one question remains. Why did Longford enter into the mentioned bought-deal agreement at all, in the first place? The company starts doing something, announces it publicly and then abandons it.
Obviously, investors share quite a different point of view. Because they rushed the shares for a rise, not for a fall. Even more – yesterday the run-up of the stock was reinforced by a large volume too. 3.5M shares turned over beats several times the average trading activity and is a 3-month high. During the session, LFD climbed by 12% and finished the day at $0.235.
It is quite hard for me to predict a further rise in the stock price. The latest company financials filed on SEDAR reveal that Longford is really in need of capital. At the end of last year, the company had only $0.87M in cash. At the same time, the net loss for 2010 was $2.2M. To me, it seems that Longford needs cash, and quickly so.
