At-the-market (ATM) programs are the most common method of utilizing shelf registration capacity, and they represent the intersection of shelf offerings and ongoing market sales. According to DilutionWatch data covering 7,300+ stocks, ATM programs are active at approximately 1,200 companies at any given time, making them the single largest source of ongoing dilution in public equity markets.
An ATM program is established when a company enters into an agreement with one or more broker-dealers (agents) to sell shares directly into the open market at prevailing prices. The ATM agreement is filed as an exhibit to a prospectus supplement under the company's existing shelf registration. The agent sells shares on behalf of the company in ordinary market transactions, and the company controls the timing, volume, and minimum price for sales. The agent typically earns a commission of 2-3% of gross proceeds.
The key characteristic of ATM programs is their gradual, ongoing nature. Unlike a traditional offering that prices and settles in a single transaction, ATM sales occur over weeks, months, or even years. The company can pause and resume sales at its discretion, and daily sales volumes are typically small relative to overall trading volume, making ATM activity difficult for investors to detect in real time. This opacity is one of the most challenging aspects of ATM dilution for retail investors.
DilutionWatch monitors ATM programs through multiple data sources. The initial ATM agreement is disclosed in prospectus supplements. Quarterly reports reveal changes in share count that reflect ATM sales. Some companies provide monthly updates on ATM utilization. DilutionWatch also uses volume analysis to estimate ongoing ATM activity between filing dates, providing more timely dilution estimates than relying solely on quarterly reports.
For investors holding stocks with active ATM programs, the critical metrics are the total ATM capacity, the utilization rate (how quickly the company is selling), and the remaining capacity. A company with a $50 million ATM program that has used $40 million is approaching exhaustion and may need to establish a new program or find alternative financing. Companies with large unused ATM capacity have significant latent dilution potential. DilutionWatch integrates ATM analysis into the DilutionScore™ to provide a comprehensive assessment of both current and potential dilution from shelf-based programs.
An ATM program is established under an existing shelf registration. The ATM agreement is filed as a prospectus supplement that draws on the shelf's capacity. The total ATM program size cannot exceed the remaining shelf capacity.
Not in real time, as ATM sales are not disclosed individually. Quarterly filings reveal cumulative sales, and some companies provide periodic updates. DilutionWatch uses volume analysis and filing data to estimate ongoing ATM activity.
ATM agents typically charge 2-3% of gross proceeds. This commission is disclosed in the ATM agreement filed with the SEC. Lower commission rates may indicate a larger program size or strong company bargaining position.
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