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Interesting post regarding short selling...
"Yesterday I said I would further comment on why the "rules" have been turning in favor of the short sellers over the years.
The bias in favor of short sellers by the SEC really began in the mid-1980's when a Wall Street Analyst named Ray Dirks finally beat an SEC "tipping" violation through the US Supreme court. From inception in 1934, until the after the Dirks decision, the SEC was quite hard on short sellers and those who through their own good DD uncovered fraud in public companies and first selectively told investors about it. This is what happened to Ray Dirks who even today is an active Wall Street Analyst. If you want to read the whole story, you can here , but below is just a short paragraph on what happened. I met Dirks several years ago on a couple of occasions.
In 1973 Dirks uncovered the biggest Ponzi scheme of the 20th century, the Equity Funding fraud. Equity Funding Corporation, listed on the New York Stock Exchange, had been widely touted as the fastest -growing large insurance company in the country, but Dirks research, which he conveyed to The Wall Street Journal and Barron's, exposed the fraud in less than 30 days. Over 20 officers and accountants and lawyers went to jail, However, as the man who blew the whistle on this Ponzi scheme, Ray himself was charged by the SEC with civil fraud and was forced to battle the Securities and Exchange Commission all the way to The Supreme Court where Dirks won the landmark 1983 decision on Inside Information violations, known widely as The Dirks Decision.
Dirks himself was not really a short seller and in fact several years ago he began assisting a number of public companies in fighting short sellers, but he was and still is a through analyst. In spite of the fact he seemed to have done everything right in exposing the Equity Funding scandal to include tell the SEC about it first, they still found him guilty of a violation for telling his investor clients about the fraud before any news on it was published. He told me years ago that fighting the SEC over the ten years cost him a million dollars but he finally got his name cleared. But after being humiliated by this case, the SEC since that time has pretty much let "attack writer"s and shortsellers pretty much say whatever they want.
I am not making this last comment up. Remember the SEC sanction against me 25 years ago brought up by Shareslueth on a few of their KNDI bashes? My attorney at the time was Irwin Borosky who was formally the top attorney at the SEC under the Carter Administration, which was during most of the time the Dirks case was active. He is the one who told me this story as to whey the SEC became reluctant to go after short sellers.
Anyway; in more recent years the SEC has become even more lax against Shortsellers due to the way SEC institutes new rules and regulations. What they do is they take suggestions for new rules from outside sources with short sellers being the biggest contributors, or congressional sources. They debate them internally and come up with a draft idea. They then publish this for public "comments" that anyone can respond on line at the SEC site, though rarely are these comments made by individual investors. If the subject has anything to do with trading, most of the comments are made by attorneys for short seller groups who are well organized. There is no groups that ever bother to represent individual investors. Certainly not the brokerage firms. They love short selling. That and margin interest is how they make most of their profits.
Aside from being paid standard interest by the short seller to lend shares, they also get the "premium" for "hard borrows" but where they really make the money is off the "credit balance" that shows up when stock is shorted. For example. If I short 10,000 shares of a $10 stock, a "credit" for 100,000 appears in my account. But, I can't touch any of that credit. But the brokerage firm can not only use it, but they can leverage it over 10 times and use this to lend to margin buyers. So they get an incredible rate of return on short positions.
So now you know why the playing field is now so heavily tilted toward short sellers".
I argued this point and I stand by it. In my former life I dealt with many institutions so I have an idea of how they think. Those that behave like AIG you don't want them onboard. They are fickle and while information does change the potential is still very good. This company is in their infancy and are executing their game plan. Any institution that can't wait a couple of quarters are not true investors. They speculated didn't like what they saw and dumped. They behaved more like a retail investor than an institution of their size.
I disagree with your thesis. I do see a short squeeze and 20-30% is laughable after a ruling. We will see who is right here. Mark my post I challenge your thesis.
Bought bACK @ $2.68 - $2.70. THIS is so easily manipulated by the mm's
about 80,000 shares bought at ask including a 59,000 share trade @ $3.20
I think GV is a good buy right here $2.79 - $2.80 just waiting for confirmation
I see this as good news for two reasons. First JJ is ruling on motions and not waiting to ruling all at once which is good. Realistically a new trial was not going to happen. This brings us closer to settlement IMHO.
yes that's true the percentage is all that matters
I tend to look for stocks under 10 with low floats and volume breakouts
I think you can get $6.15 -$6.20 today
Check out SNSS breakout, momentum and big increase in volume...Also Blackrock purchased 2.5 million shares last few days
That's your opinion your entitled to it, I disagree. We will see when the time is right.
Regardless I would prefer to have an investor who does not behave this way. SO for me it is good that they are gone. If they want to come back in after after the ruling , good that will make the short squeeze all the bigger.
Sold my positions $3.00 - $3.05 , from $2.50 - $2.60, looking for another entry
Yes this may have been one of the motivations. They are not the type of institutional investors we want. When the numbers get updated on Feb 15 I expect to see some surprises on who owns shares and how much.
Yes I know. Some of the information doesn't apply to your question. My point is that we don't need an investor like AIG involved. They bought 5 million shares in one quarter and sold it in another. The type of investors we want are longer term and patient. Had they not sold their shares they probably would have dumped into the rally which would not have been good so I see this as a good development.
Here are my thoughts about this that I posted on another board:
AIG selling 5 million plus shares definitely contributed to the selling pressure. However the short position is at the highest level it has ever been so we can't just say it was them. Also for every seller there is a buyer which is simplistic , yes but I made this point on Investors Hub, do we know if another group has taken a large position such as Ashley Keller's company Alyeska Investment Group? Perhaps one of the other top 5 holders as of 9/30 or maybe someone new. Who knew that AIG had taken such a large position prior to 9/30? Let's see what the 13-f's show on Feb 15.
You also said that AIG maybe was concerned about the delays and they got fed up and dumped. Highly unlikely. You know I have been pointing this out as an individual trader/investor we do get frustrated, but a large company does not sell 5 million shares because of a few months delay in my opinion. They may have changed their minds in terms of their expectations, they may have found a better investment in the space, there might have been a management change and the stock does not meet the managers criteria? There are many reason for the decision.
Its good that we know now so it won't be a surprise on the 15th. I think if they were going to sell anyway better that they did it already, they certainly didn't behave like a professional group IMHO. I mean you take a 5 million share position in a quarter and sell it the next. Either their initial DD was wrong or their current DD is wrong. Regardless I am certain we are going to be pleasantly surprised when the new institutional numbers come out in a few weeks.
Read more: http://vringo.freeforums.net/index.cgi?board=general&action=display&thread=1137&page=5#ixzz2JeiPaqAe
Your characterization is inaccurate I didn't say it wasn't significant I said there may be other institutions who have purchased. None of the groups you posted are top 5 holders other than AiG. Maybe our new director's company has increased their position perhaps? Look at his BIO
My mistake it was poststyle but it was the same info and my response is the same.
Its interesting that you have pointed this out here and in Steve Kims forum. I will tell you what I said there. Are you aware of other holders who have stepped in or current holders that may have added? Since most holders have not updated their 13-F filings I would say no. AIG is one company as we have seen the stock has stayed in a very tight range over the last month that is accumulation by my experience. So while they sold obviously someone else has bought in. Let's wait till the 15th to see who that is.
One thing to note is that the short position is as high as its ever been, yet they (shorts) cannot push the stock down significantly. Why is that? My opinion is there aren't significant pools of shares to short so they are treading water. They are not closing positions but rather covering lightly and then shorting again. Once we have real news, the squeeze alone will move this much higher than people think. Look at KERX or NFLX for examples and to a lesser extent RIMM recently.
People think the markets are efficient and reflect all the known news. That is not really true because if that were the case you would never have short squeezes.
I don't think so. On the confirmation of a win and all the money that goes with it, institutions will pay up,right now they are passive buyers. They will be aggressive buyers on a win because that is how they operate. The win will change the story to ZTE and now MSFT plus new lawsuits and they will back the story. They like it now but not to push volume just passive accumulation. Look at how many shares they have bought since 8/31.
I know that but now you are saying that the writer is working with the short crowd. This happens sometimes, could be the case here, but one can only guess. He doesn't disclose if he has a position (short)
Each word in an article is selected by the writer. Why would you state $30 million and not indicate that the past damages could create a much larger larger award? The omission is the bias. Why indicate that Google says we will appeal and win without a corresponding comment form VRNG? Writers have biases. This writer may personally believe that small companies should not be taken seriously by investors hence the trivial nature of the wording. Some people are small cap investors and others would not touch any stock with a market cap lower than 1 or 2 billion. I am not saying the writer did this with an agenda BUT I am saying that as a writer it was not written to show what the true picture is. Why? That is a question only the writer can answer.
I agree. The way the article was written, if I didn't know anything about the case , I would NOT consider looking into the company. The article implies trivial. I am not sure why a credible organization like WSJ would not present a fair and balanced view? However people have biases and writers always show what they are implicitly or explicitly if you pay attention.
Why do you care? The only thing you post on here is timberrrr, figure it out.
Also yesterday this went down to $2.48 with heavy selling early. Today I see 30,000 shares bidding @ $2.85/$2.86, what's changed? Nothing the mm's have reloaded and will let it run. With a small float company this is what happens.
I understand this JJ. My comment has more to with the tone of the article. The author has chosen to include this comment by Google and they use the $30 million figure without stating that the ultimate outcome will be significantly larger for VRNG. It was written with a heavy negative bias, this was my point.
Yes you did..
As I said I see this pattern, the same as ACAD, big run pull back a little sideways action and the resumption of uptrend....should be very strong going into year-end in March.
If you want to know why Vringo isn't flying right now, read the tone of the news from the WSJ. Everything is minimized..
By Ben Fox Rubin
Vringo Inc. ( VRNG ) said it filed a patent suit against Microsoft Corp. ( MSFT ), using the same two patents it utilized in a suit it won against Google Inc. (GOOG) and others late last year.
Vringo, a mobile-technology and intellectual-property company, had sued Google--the primary defendant--as well as AOL Inc. (AOL), IAC/InterActiveCorp. (IACI) and others, alleging infringement of two of its patents used to select and position advertising on Internet-search results. It won about $30 million in damages and was granted future royalties from the suit.
That case remains in its post-trial phase. Google has suggested it will appeal, saying it would ultimately win the case.
In the new suit, Vringo alleged Microsoft had willfully infringed the two patents with its search engine, Bing.com.
A Microsoft representative wasn't immediately available for comment.
Vringo was founded in 2006 with a focus on mobile technology, but last March it agreed to merge with privately held Innovate/Protect, which now controls most of the company and brought it into the intellectual property industry. Innovate/Protect, which bought the two patents from Lycos along with six others for $3.2 million, has alleged that the technology it owns is widely used in the search industry.
Since the two patents were found valid and infringed in the Google suit, Vringo had been expected to file additional suits against other technology companies using those patents.
Vringo's shares were up 3.5% at $3.25. The stock is up 27% over the past three months. Microsoft's shares were down three cents at $27.82.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
Altucher comments on VRNG
Vringo (VRNG) - As I initially predicted, VRNG defeated Google (GOOG) in its patent case. But VRNG continues to trade for less than the cash owed to it by Google. It clearly knows how to allocate cash in an accretive manner. The stock is up from when I initially wrote about it but I have no idea why it's not up even more. The market erroneously believes that Google can wear out Vringo in appeals but as I explained in further articles, this is not possible. All the signs are positive and my thoughts stay the same on VRNG.
Reloaded GV @ $2.50 -$2.60 for another run... mm's executed bear raid perfectly now they will run it again
I don't think most people who have been in this for a while are fearful. The drop to $1.75 on the Laches ruling was fearful. The problem as I see it is that because of the nature of what the company is doing there is a dearth of news flow. They are dealing with courts here and in Europe so the time lines are not their own. Whatever else they are working on through Lang's Israeli office is keeping kept down for competitive reasons. So you basically have no news for months now. This tempers peoples enthusiasm, hence the low volumes and spike in volume on anything, like a Seeking Alpha article which are mostly useless but traded upon. Bottom line is we need to see what this company is doing and hopefully they can give us shareholders something to analyze what this company is worth.
P.S if you look at the main stock forums where Vringo is discussed, here, Vrngofreeforum, stocktwits and Investor Village, you will note a dramatic decrease in posts. when people don't talk about a company it is because there is nothing really to say due to lack of company news and that is why voumes are way down, only 632,000 as I type this note @ 12:30.
Yes I verified this with Cliff in early December.
Hey Doone...
Take a look at the weekly chart of Acad... now look at GV.. ACAD is more advanced in the pattern but you will note it had a big breakout, came down , found a base and then proceeded to take out old highs. This is where GV is (basing ). In March they will report their year-end totals, I expect them to be huge. I expect GV to be $6 plus by then and I think it will sell off on the news as it has already anticipated it.
Short Interest Up 10.53%
Shares Sold Short
Short Positions (01/15/2013)
14.14 Million Shares
Change from Last
+10.53%
Percent of Float
20.75%