biophar, let me entertain that idea of 'large amounts of share' being locked-up somewhere (call it the 'family' theory, conspiracy or whatever one wants to call it).
Just as an EXAMPLE assume 100Mil shares would be in the lock-up. What can one do with it.
1) Take Profit
The first thing would just be an investment. You can't take control of PPHM but you can make a fortune having its shares if what you believe is correct. Like Novartis having Roche shares, but then less publicly. Works also if your competitor gets/acquires PPHM.
2) Use them in the LID
If you have 100Mil shares then you can short 100Mil shares without a risk that is higher then what you paid for the shelved shares. So well contained and well budgeted worst case. If you do it right you can even make profits.
3) Lower Liquidity
Use them to lower liquidity and hence give extra push up when the big event occurs (liquidity is only one aspect). That is ALSO acting as a lid because every order the MM has to fill needs to be compensated with the reverse action to close. hence the waves a PPS makes. The lesser waves the lesser MM involvement. This combines well with #1
4) Increase Price for competition
The #3 can be used to make sure that when PPHM announces said boom-event the PPS appreciates so much that no company would be able to acquire PPHM. Kind of, if I can get it nobody will get it strategy. Assume 250Mil outstanding shares at such time and due to more then halve being locked up (incl. those part of all kind of employee plans and some II's) the real sellers will be selling the high prices, so no or smaller MM rebound.
5) Handicap PPHM Funding
It is to be expected that when PPHM would make a sudden jump to 25, 50 or 100$ as we have seen for others (certainly giving PPHM 100 fold potential) that PPHM will sell some ATM to fill the coffers. If one would competitively drop/short sufficient shares (they are covered anyway) in that movement then the PPS would be pressed severely down (if this is timed right), that is when the shorters start to short and end the peek.
6) Acquisition Averaging
The already discussed strategy of acquiring, say 120MIL, remaining outstanding shares of a company while hiddenly holding 100MIL that never surface, not for voting and not for anything else, allows to severely average down the price per share bid since about 50% of the offer comes back to the own pockets. It also allows to be in a BETTER position during a bidding war because one knows that a Bid of 100Bil$ only costs 50Bil$ and if one looses the bid then the coffers of the hidden party get filled with 50Bil$ extra anyway.
So there is a lot to say for 'shelving' BUT personally I do NOT believe that there is such a party holding 50,100, 150Mil hidden shares. However, Dart/Easter with taking such a large PUBLIC part of PPHM, if they would hold an HIDDEN part in the Cayman accounts, then at some point they may know (as only party) how many % of the remaining shares would be needed to have a majority vote because the hidden shares would NEVER show up to vote. Good thing PPHM made a deal because it includes a statement that the shares of Eastern will not be used for such ends. And then of course there is the poison pill.
The nice thing is that in ALL scenario's in the end we, the retail shareholders, win.
Peregrine Pharmaceuticals the Microsoft of Biotechnology! All In My Opinion. I am not advising anything, nor accusing anyone.
