Shelf Filings Are Increasing, But Don't Get Too Excited

Shelf registrations are increasing, but it has little to do with tapping into future higher prices or a new found optimism in the market (see WSJ article). Back in 2005, the SEC put a "shelf life" expiration date of three years on all shelf offerings. The initial set of filings after the ruling are now set to expire on December 1st of this year, causing many companies to refile, even if they are not expecting to access the equity capital markets at a time when prices are depressed. Nonetheless, since shelf deals can be accessed at any time, it is smart to re-register so that capital can be accessed in the future when it make does make sense. When the market is rallying, it is not unusual for companies to float equity that may be selling at inflated prices. On the other hand, accessing capital in a down market when value is low is probably more of an indication of trouble, making it less likely that companies will sell stock off the shelf in the next few months, even if re-registering opens up the window for them.