Cytodyn Inc (CYDY)

[jboatswain]

Saltz is right about the sell pressure.

There are two kinds of investors in microcap biotech. One kind is very long on the companies and will replace the management if things don't go well. But this kind is in minority.

The other kind is not very long. They like to make quick profit because fellow investors follow the same strategy.

They get warrants + shares. They sell shares that are granted to them. After that, they also SHORT shares. Now this puts pressure on SP. At this point, they can take two routes: convert warrants as cover if SP > .75; or buy shares in the open market to cover if SP <= .75.

You can keep your short position open for months, if you want. So, they don't need to go to CYDY for conversion of warrants right away.

The kind of investors that Paulson places shares and warrants are like loan sharks. They don't care about the long term prospects. They also know most of the mini cap biotechs fail. So, they use the trusted strategy of sell shares and keep warrants or sell shares, short shares, then make profit, keep warrants.

This is why, right after private placements, SP of mini biotechs fall right away. Every shark in that group is following the same trick: SELL and SHORT, then keep warrants.

Sometimes, these sharks notice weak companies or companies whose SP < $1, then SHORT till death, and wait for R/S, then cover.