Last week, Cleveland Biolabs (NASDAQ:CBLI) announced that it had raised approximately $8.39 million in a registered direct offering with what termed "a single institutional investor." Apparently, the company agreed to sell 1,400,000 shares of its common stock at a discount price of $5.99 per share despite the fact that the stock was trading over $7 when the deal was announced.
Having a name like this take a position in the stock will bring credibility to the company and help call more attention to all the great things it has lined up for the weeks and months ahead, much less for the long term.
While it may not seem fair to the retail investors who have been paying over $7+ for shares of the stock at the time, we believe Michael S. Dell,will soon be revealed as that investor. As many on Wall Street know Dell has a strategy like Warren Buffett’s, and his investing philosophy and top holdings speak for themselves.
Our sources tell us that he went out of his way to reach out to CBLI personally and told them of his interest in the company. He wanted in and he wanted in as quickly as possible. Could it be that Dell is hearing the same things about additional government funding and orders set to start coming into the company for their FDA fast tracked anti-radiation countermeasure, CBLB502? Several analysts, think shares of the company could double or triple from current levels during Q1 of 2011. As I told readers when the shares were trading at $3 just months ago, CBLI is a multi-billion dollar company waiting to happen.
According to a recent article in Fortune magazine, Michael Dell’s personal investment is managed by MSD Capital. Since started in 1998, the firm's track record and achievements have taken them over the $12 billion mark for asset management while investing in public equity, special opportunities, private equity, real estate and partnerships.
According to the MSD website, "make long-term equity investments in a limited number of outstanding companies, both in the United States and abroad. We employ a disciplined, research-intensive analytic process in searching for businesses that possess sustainable long-term competitive advantages and are managed by honest, astute and shareholder-minded management teams. We firmly believe that businesses create wealth for their owners through the long-term generation of net free cash flow. Although we typically invest as a minority owner of publicly-traded companies, given the long-term perspective that we take when we make investments, we consider ourselves to be a partial owner of the businesses in which we invest. We focus on the absolute value of businesses, not their value relative to other "peer" companies or general stock market indices."
Dell founded Dell in 1984 and in 1992 became the youngest Chief Executive Officer of a company ever to earn a ranking on the Fortune 500. He is easily considered a visionary leader and has earned titles like “Entrepreneur of the Year” from Inc. magazine, “Man of the Year” by PC Magazine, “Top Chief Executive Officer in American Business” from Worth Magazine and “Chief Executive Officer of the Year” by Financial World and Industry Week magazines. The fact that he believes strongly enough in CBLI will speak volumes to the rest of the biotech industry.
Did the company, in essence, pay for that additional exposure and "credibility?" In a sense, yes. I think so. Will it be worth it? Definitely.