Mattersight's "Stock Overhang" Problem -- Pictured. . .

With its shiny new resale S-3 effective, the IGC Fund IV may unload up to 2.36 million MATR shares into the open markets, or in private transactions or off-market blocks without any restriction at law.

The occurence of this sort of an event is called an "overhang" event, and the graphic at right (click it ot enlarge) depicts visually why the event carries the name it does. The average daily trading volume of around 40,000 shares is shown in blue, on the bottom -- with the more than 2.36 million IGC owned shares shown in orange, "overhanging" the daily volume of all other sellers and buyers. Even if IGC sells 40,000 shares every day, it will take nearly 60 trading days to liquidate the "overhang".

But the reality is that it will perhaps take a year or two, if the seller(s) don't want to unduly injure MATR's NASDAQ trading price on any given day.

So -- with CEO Conway's mention of slowing sales momentum in Q2 2012, I see very little chance of any surprise upside catalyst in this stock for perhaps a year or more -- and, in the mean time, I see widening GAAP losses per share. Ouch.