Why NMT Medical (NMTI) is surging with no news

NMT Medical, Inc.  (Public, NASDAQ:NMTI) is up 34% in the last 3 months, with zero news. What gives?

I went digging through the SEC filings for NMTI and low and behold, I found pay dirt.

Does anyone remember last summer when the Italian luxury glasses manufacturer Luxottica purchased sports sunglasses maker Oakley (OO) for $2.1 billion, or $29.30 a share? If you do, you remember that the Oakley buyout was no surprise because of their SEC filings.

Yes, the Mac Daddy of SEC filings, SEC Form 8-K Item 5.02: the Executive Severance Plan amendment. In Oakley's case, this 8-K detailed how Oakley's officers would be compensated, should the company experience a "change in control," otherwise known as a buyout.

I found something similar today in an SEC filing for NMT Medical.

Let me build the suspense a little bit more though, and give you some background information on the company (for those of you who know nothing about NMTI).

NMT Medical, Inc. is a medical technology company that designs, develops, manufactures and markets implant technologies that allow interventional cardiologists to treat certain kinds of cardiac structural heart disease through minimally invasive, catheter-based procedures. The Company is investigating the potential connection between a common cardiac defect that allows a right to left shunt or flow of blood through a defect like a patent foramen ovale (PFO) and brain attacks such as embolic stroke, transient ischemic attacks (TIA) and migraine headaches.

Back on April 15th, NMT filed SEC Form 8-K item 5.02:

Item 5.02. Entry into a Material Definitive Agreement.

(e) On April 15, 2008, NMT Medical, Inc. (the "Company") entered into Amendment No. 2 (the "Amendment") to the Amended and Restated Employment Agreement by and between Richard E. Davis and the Company, dated as of May 20, 2004, as amended by Amendment No. 1 to such agreement, dated as of August 14, 2006 (as amended, the "Agreement"), with Mr. Davis, the Company's Executive Vice President and Chief Financial Officer, providing for an increase in Mr. Davis' base salary of approximately 4%, from $345,000 to $359,000. In addition, the Amendment also revises the payments to be made to Mr. Davis in the event of a change of control of the Company under the Agreement. Such cash payment will be equal to a percentage ranging from .33% to 1.4% of the total deal consideration paid by an acquirer in a transaction constituting a change of control of the Company. The percentage paid to Mr. Davis will vary based on the amount of the total deal consideration.

Of course, you're not necessarily going to see a buyout every time a company amends its executive severance plans. But it’s the only explanation I can seem to find on why their chart looks like this over the last 3 months…

Disclaimer: The author has no shares of the securities mentioned in this article

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

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