Why Lantheus Holdings Inc. Got Smacked Down Today

What happened

Lantheus Holdings (NASDAQ: LNTH) is down 12% at 12:38 p.m. EDT after announcing that an existing shareholder plans to sell 3 million shares.

So what

Unlike a secondary offering where a company sells new shares, Lantheus Holdings won't get any cash for the sale. On the other hand, current investors also won't be diluted like they are during a secondary offering. It's no different than shares trading hands on the Nasdaq exchange, just in a much larger volume.

Image source: Getty Images.

It appears that shares are down simply because it's a large shareholder, Avista Capital Partners, that's selling a large chunk of its shares. Lantheus Holdings has about 37 million shares outstanding, so this transaction represents about 8% of the outstanding shares. Investors are likely worried that there's some unknown issue that's leading Avista Capital to sell some of its shares.

But, alternatively, it could just be that the private equity firm needs to liquidate its assets for reasons that have nothing to do with Lantheus' future prospects. Before Lantheus Holdings came to market in 2015, it was backed by Avista Capital, which bought the segment from Bristol-Myers Squibb (NYSE: BMY) in 2008. With Lantheus trading at more than double its IPO price, Avista Capital may have decided that now is a good time to return some of the invested capital to its investors.

Now what

After selling the 3 million shares, Avista Capital will still own 33.2% of Lantheus, so it's not like the private equity firm is getting out completely.

Investors might be getting a good deal investing at this knocked-down price, although cautious investors might want to wait and see where the buyers of those 3 million shares will value Lantheus' shares.

10 stocks we like better than Lantheus HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Lantheus Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.