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Jeffree.. I am with you 100% on your post.
ellix... when all is said and done, the question remains. Why? Why is there all this in-your-face shorting? I maintain that there is a reason, and it is not the traditional reason of overvaluation. IMO it is one of the following:
1) The ones that have manipulated this stock for so long may have lost sight of the real value of this company
2) A private equity entity is trying to cap the price to "steal" the company.
3) Entities (i.e. Nokia) are putting pressure on the stock price to effect a favorable outcome in negotiations.
I have no basis to believe one or another, but in my 30+ years in the market, I do not have an answer, but I am long and strong. ( 17 years).
Jeffree.. The market makers didn't have to get the shares from anywhere. Neither does anyone else as long as they cover before T+3. This is one of the glitches in the current system. It ain't right but there it is. However, I think the good news is that those who were determined to peg $27 last Friday are having problems closing out those short term shorts. ( has to be done by the close tomorrow). The long term short in this stock is another issue, which is very puzzling but not inexplicable.
http://www.bondsquawk.com/2010/09/can-an-etf-collapse/
To all who feel paranoid about the markets, you are right to be so; they ARE out to get you. And to those who don't, time to put away the koolaid and be outraged at the state of our markets.
Jeffree.. I agree with most of what you say. IDCC is not the only company that is the subject of this manipulation. Many small and mid-sized companies serve as personal ATM's for these manipulators. I would add that, in addition to the lack of an uptick, the ability of these "investors" to short without a HARD borrow before short sale is another tool in their arsenal to move prices wherever and whenever they want.
The average investor may not be aware of the mechanics of this "heads-I-win-tails-you-lose" scenario, but they sense that something is not quite right. No wonder more than $10B is leaving the markets everyday.
The SEC and the legislators are either really stupid or bought. I'd go with the latter.
As I have said here before, when this behavior finally comes to an end (if it does), it will be seen as the greatest financial theft in the history of markets.
OD...Thanks for the insight.
Yes, the old "deferred revenue" bugaboo! I am not an accountant but I guess the only way to account for upfront payments, from a balance sheet perspective, is to classify them as liabilities that get allocated over the terms of the agreements. At the least, it distorts the "book" or "real" value of the company. No?
How does one get a book value of $6.03 with $14 in cash and virtually no debt??
dc....I wouldn't be so sure that "no shorts post on Ihub". Also, people lose sight of the fact that the "float" is defined as shares outstanding less insider and institutional holdings. Accordingly, more than 30% of the available shares are short.
This is a very unusual situation. So unusual that (as I have mentioned several times on this board), I have to believe this is not a short position designed to profit from an over-valuation of IDCC, but a strategy to cap the price of the stock. To what end and by whom, I do not know but I believe we will find out in the relatively short-term. JMO.
dndodd... Not out of the realm of possibility, IMO.
nessco... That's easy. First off less than 5% of today's trading is done by individuals. These individuals, whether short or long terms investors, participate in a market where a zero-sum game no longer exists. The hedge funds and large brokers (95% of the trading) are playing a VERY short term game where, through the use of the non-existence of an uptick rule, the ability to sell shares that don't exist and the manipulation of equity and options market makers, they are able to make perhaps tenths of a percent everyday. This strategy tends to cap stcok prices in a narrow range.
The unsuspecting long-term investor, who is not aware of these tactics, has been conditioned to believe in holding for the long term. When this investor sees the fundamentals of his company improve with no commensurate stock price appreciation, he gets discouraged and sells. The unsuspecting short-term investor (trader) has even less of a chance of making money and quickly is out of the game.
So yes, nobody can stop an investor from buying a stock. What that investor needs to realize is that he may very well be buying "phantom" shares. Even if he buys real shares, more than likely, he will fall prey to the scenario above.
Re: potential buyout. I agree somewhat with the post by Romuluss yesterday which opined that a "going private" transaction is in the works. I have no idea whether management is involved but, in the following analyses, it is irrelevant. This is what I believe (and have thought for a while) is happening:
Suppose you were a private equity firm (or any other entity with an interest in IDCC and cash). Say that you know, at $50 per share, the purchase of IDCC would produce a 13.5% pre-tax return (rounding numbers off for simplicity: 44M shares X $50.00= $2.2B minus the $600M in cash is a net outlay of $1.6 B. The projected pre-tax net revenue for this year is about $215M which equates to a 13.5% ROE.
Now suppose that you utilize short sales to "cap" the stock. Further, you end up shorting a net of 5M shares at around $25.00.
As a result of this "cap", you deem it reasonable that the board of directors would be obliged to accept a $35.00 offer. (a 40% premium).So, now you pay $1.54B (44M shares x $35.00) plus $50M for covering the shorts (5m shares X $10.00)or, $1.59B. Subtract the $600M in cash and it costs you $1.0B for the $215M in pretax net reveues or a 21.5% ROE.
I have proposed this explanation several times on this board and have been bashed by the "truth squad". So, bring it on.
Incidentally, I believe that if this scenario is true, there is an entity that is currently short well in excess of 5% of the outstanding shares. A level at which, if you were accumulating the stock for acquisition purposes, you would have to file a 13-D. This entity may believe the lack of a requirement to report large short positions provides them with impunity. However IMO, a carefully crafted action against someone trying to pull this off would ultimately force the discovery of their actios.
http://seekingalpha.com/article/216564-sirius-xm-naked-short-selling-and-market-reform?source=email
With the German banning NSS this week and the settlement with the SEC described in this article, dare we hope that this BS is coming to an end?
At the very least, the biggest scam in history will start to get some ink. I don't see how the press will be able to avoid it. Here's hoping.
I was wondering when someone would say something! I am wondering if there might be something in Nokia's 10Q (being a foreign company it has a different designation, but I don't know what it is). Any of our board's sleuths checking this out?
Odog.....with all due respect, if you are offering the fact that IDCC's stock price has tracked the market as evidence that nothing nefarious or manipulative is going on in the trading of the stock, I don't buy it at all.
dmiller... The sad fact is that there are many on this board wondering wtf? How could the stock go down? What's up with the valuation vis-a-vis the price? Why is the stock trading at 4 times this year's earnings (net of cash)? Why would the short interest be so high, etc., etc. All of these questions are germane to our discussion. I will continue to try to shed some light. If I am censored, so be it. Good luck to all IDCC longs.
To all or the "moderators: Can anyone explain to me why the conversation between myself and dmiller was deleted? While it was ostensibly OT, the fact remains that the market is not a level playing field. Every investor, particularly IDCC investors are entitiled to know the truth.
Loop.. much more likely that it is end-of-quarter tape-painting by the short hedgies. Being June 30, hedgies will be taking their 2nd quarter fees, based on performance for the quarter. I've noticed other heavily shorted stocks disproportionately down at the end of this (or any other) quarter. We should be able to tell if this is true if/when they unwind their temporary naked-short within the next 3 trading days. Don't you love "the market"?
Jeff....My first reaction to this is to be very suspicious of the intent and result of this "debate". I fully expect some sort of "hatchet job" to ensue from this "exchange", as I believe Nokia has a great deal of influence with Thomson Reuters (someone here probably knows better than me, but I think Nokia may even have a financial interest in T.R.). We shall see.
With regard to IDCC, IMO, It would be much more telling if short positions in excess of 5% had to be reported. But, alas.....
Yes they can buy back shares, but have not since the end of Q3 2009. I believe there is a very significant reason for this, and I think it has to do with "safe harbor" provisions having to do with the value of stock used in an acquisiton, whether IDCC is the acquirer or the acquiree.
IMO, the unaccounted-for $6M legal expenditure for Q1 could very well have something to do with this possibility.
AMR....If you take out the institutional ownership of around 55%, it is closer to a 25% short interest. And if you look at the average daily volume, which could be as low as 100-200K "real" shares traded per day, we are looking at an insurmountable days-to-cover, IMO.
I am 100% sure about the manipulation.
Paheka....No question in my mind. I have maintained for quite a while now that the short position in IDCC is designed to "capture" the stock. It is not a traditional short that is put on because the sellers believe the company is overvalued.
M.O...I'm glad you posted this. When I tried the link to zerohedge for this item, they had shut down the site to "work on a few things". Now that it's up again, I can't find it.
Everyone knows that GS is smarter than anyone else (TIC). But that kind of record is preposterous. Just another piece of evidence that underscores the state of our "markets".
Paheka...On the other side of the coin, perhaps he will now devote full-time to trying to destroy IDCC!
AMR...Totally agree. Our only hope for all of this BS to stop is the Justice Department. They are slow, but I do believe they have not been bought.
Isn't it quite curious that, since trading went computerized decades ago, there has not been one "mistake" of this magnitude despite the fact that there have been hundreds of millions of opportunities for it to happen? So now, I guess we will treat an event of this nature like a "hundred year" storm or some such thing; something we have no control over. All we can do is invest our money and hope someone doesn't mis-type.
IMO, we have not heard the last of this. It is safe to say that the SEC will not do anything, but I believe the justice department will be all over this.
Oso.. with all due respect, do you really believe that a "market" exists, as defined by all the tenets of free enterprise, capitalism and democracy? Not any more.
There are many questions about the action in the "market" today. But, for starters, what effect did the removal of the uptick rule
have in the action today?
The market is predisposed to be biased to the downside because of the loopholes that allow manipulators to move stocks down more easily than the opposite. The fact that the market started to get away from the shorts is what precipitated the "mistake" that was made today. AIMO.
By the way, if I am not mistaken, this is your first post in a while. If so, welcome back.
Amen to that. As M3s says, "what a crock".EOM
IMO.... nothing more than those who have controlled the stock price for so long have run out of "bullets'\.
Jeff...Great analogy. I would venture to say we've a few homegrown ones too.
DC. Agreed 100%. eom.
Jeff...I agree with you. I believe in the very short term there will be a defining event. What that will be, and how the stock will react, I will not venture a guess. However it will be interesting to observe to what extent the manipulators will try to corral an upward movement.
Unfortunately, because of the tools available to them (i.e, shorting on downticks, free-riding on short-term, naked positions, etc.), the prospect of a traditional squeeze is significanlty diminished.
Incidentally, I do not believe the current short position is a "traditional" short. Way back, when certificates had to be borrowed and delivered (and it was a zero-sum game), shorts had no advantage over longs. When they were wrong, they paid dearly.
IMO, a short of the current magnitude in IDCC is for another purpose. Perhaps the imminent event will shed some light on this.
JL...And they can short on downticks andthey can short without borrowing as long as they buy back in before t+4. And, if they are short more than 5% of a company's shares there is no requirement to disclose. The entire equity market for small to medium-size companies is a farce.
To All..After digesting the well-researched, well-presented, cogent document that xdx and eneerg have released, I hope it is now clear to everyone that part of Nokia's scorched earth behavior includes the manipulation of IDCC's stock as set forth by myself and Paheka on this board.
I encourage everyone to keep their eyes and ears open for any shred of evidence that this is indeed happening. Unfortunately, as we all know, there are not the same transparency rules for shorts as there are for longs. So, it does stand to reason that our friends from Finland will continue to use this anomaly in furtherance of their agenda.
As I have said, Simonson and his gang are playing a dangerous game and, thanks to xdx and eneerg, the stakes have been upped substantially. JMO
Paheka...Well said. In fact, I am so sure that you are right, that "speculation" hardly seems like the right word.
I think Simonson has been playing a very dangerous game. I'd love to see this come back to bite him hard. It would be jail-time if he were ever caught. JMO
Sorry.....I have no idea what you are saying.
AMR...This is the first time I have seen anything like this in the 40+ years I have been in the market. There doesn't seem to be any logic or benefit to continuing to short a stock to "peg" the price.
Jeffree just posted a plausible explanation: that those who have benefitted from the manipulation of IDCC and numerous other stocks over the years don't know what else to do; don't know how to undo the fix they are in.
His is a simple and logical explanation. I don't have an explanation, just scepticism about the way prices can be manipulated for various purposes, none of which have anything to do with investing. But that's a whole other conversation.
Jeff...You could be right. And I hope you are.
Jeff...It does seem incredible, doesn't it?
The argument that the share price reflects the market's doubt that IDCC will be able to replace all of the upfront money that it has received over the past few years may be correct. But, even in the worst case does it justify a 25%-of-float short position? I don't think so.
This is why I have stated several times that the short position represents a tactic to keep the share price at a certain level as opposed to a bet that the shares will go significantly lower.
I cannot give a definitive reason why this is happening, but I do believe it will become clearer in the very near term.
As I said yesterday, I believe this anomaly is not unrelated to the suspension of the buyback.
Very curious. JMO