Just curious,

I have a stock which recently announced it was offering an additional
several hundred thousand shares on the market at a price below the
current NASDAQ market price.  After the news, the stock went up.  Why
in the world would an offer below market price for more shares of a
company cause the increase?

It would help if you could give the name of the company.

There are many reasons this could happen.

For example, if it is a small company and a major firm is purchasing a
large stake of the company at a slight discount to the street price -
the market could believe that the company will be able to use the cash
infusion and support from the larger company to quickly grow.

It could be a variety of reasons, but they would be based on details we don't have.

Hi, thanks for the quick reply.  The company I'm referring to is
Redwood Trust.  I don't nkow if it's as you suggested, but certainly
I'm interested.

Thanks !

I can't seem to find any news of them issuing new shares- could you
give more details about where you read this?

I did see that they just declared a divident for holders of record on
Jun 30th and there was unusual volume on that day.....

Hi again:

The news posting was made in May it turns out. " By Michael Baron ,
CBS.MarketWatch.com
Last Update: 9:21 PM ET May 14, 2004 **Redwood Trust (RWT) shares
gained almost 5 percent. Late Thursday, the Mill Valley, Calif.,
financial firm priced a public offering of 1.05 million common shares
at $42.50 each. The company said it expects to use estimated proceeds
of $45 million from the offering to fund continued growth in its
business of investing in real estate loans and securities. The deal
includes an over-allotment option for the sale of an additional
150,000 common shares. ***"

It looks like it was never below $50 that day on the market though.  I'm confused.

the information you are basing you inquiry on is inaccurate. on may
14, 2004 redwood trust issued via public offering 1,050,000 shares of
common stock at $45.20 per share. $45.20 was the closing price of the
stock on the nyse the day prior, may 13, 2004. on the 14th of may,
trading on the nyse of the shares of redwood trust never touched fifty
dollars. open, high, low, close for the day are as follows:
45.75,48.96,45.75,47.35.