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Secondary offerings—an unexpected sign of strength?

According to conventional wisdom, a secondary offering is bad for existing shareholders. When a company makes a secondary offering, it's issuing more stock for sale, and that will bring down the price of the stock.

That's bad news, right? Not necessarily, said Jim Cramer.

Although the "Mad Money" host concedes that this logic of a secondary as bad news does make sense, he thinks it is an old fashioned way of viewing the market.

Today, a secondary could also be a signal that management is financially shrewd and that they're unlocking value in a less conventional way.

Huh?

With interest rates at or near historic lows, "Companies have been issuing equity to either pay down debt or to refinance it with cheaper debt that carries a lower interest rate," Cramer said.

"The money saved on...


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