What happened
At the start of this week, Green Brick Partners(NYSE: GRBK) stock was merrily chugging along on the stock exchange. That soon changed for the worse, especially when the home-building and real estate company announced that an institutional shareholder was fully selling out of its position in the stock.
As a result, Green Brick's shares had declined by nearly 10% week to date as of Friday before market open, according to data compiled by S&P Global Market Intelligence.
So what
On Wednesday, Green Brick announced that the Prelude Structured Alternatives Master Fund was selling 850,000 shares of the company in a public offering. That sale kicked off the next day, at a price of $45.75 per share -- more than $4 below the $49.99 level the stock closed at last Friday. The sale is expected to be effected quickly; Green Brick said it should close this Friday, Sept. 8.
In contrast to a secondary share issue launched by a company to raise funding, this is a sale by an existing stockholder. As such, Green Brick will receive no proceeds from it.
The fund is entirely cashing out of its position in the home construction specialist with the 850,000-share sale. That holding comprised 1.9% of the home builder's total shares outstanding.
Now what
This very much feels like a case of exiting an investment at a juicy profit. It wasn't immediately apparent why Prelude is selling out of Green Brick, but the latter company's stock hit a 15-year high in July. Funds like Prelude tend to be opportunistic small shareholders and have little to no strategic interest in their investments.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Green Brick Partners. The Motley Fool has a disclosure policy.
