I saw that article yesterday. Good background, it does not appear to be completely accurate. I am not worried about dilution. The refrence to the SEC filing to sell $22.5 million in more shares is actually the value of the shares issued to Aston to consoloidate the minority interest.

Shares outstanding will go from 9 million to 13.5 million if Aston converts their preferred to common shares over time based on the conditions. They announced it as accretive to earnings, which it appears to be. The down side is that it appears that Highbury's management screwed up in that they gave away part of their cash hoard to Aston's management when they should not have. The dividend should have occured before bringing in the Aston employees in my opinion.

It is hard to know how many warrants will be converted. The current prices make it foolish not to. Peerless converted 1.09 million and that is all we know from SEC filings. The worse case is that all convert bringing in $5 per share in the process. It is dilutive in the sense that they are buying in at 9 times cash earnings, but not significantly if Higbury's management responds by repurchasing shares.

The question to ask is this: Is Higbury's management acting in the best interest of shareholders or in their own best interest? Yes the share price has risen significantly, but is that due to Peerless, Talon and North Star?

Based on its filings Peerless has been saying that Management did little as the price feel below $2 nine months ago. Mgmt goofed the deal with Aston regarding giving away part of the cash on the books. Mgmt over paid for the warrants it repurchased. Mgmt screwed warrant holders by effectively making them act now not later.

Mgmt would likely counter that the stock price is up and that is what matters.

Disclosure: long PRLS and HBRF