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JL, Quote: "Its pretty clear you do not understand "liquidity"..or what happened to AMRN's PPS when the PPS dropped from $19 down into the $7 range during the 2011-2012 era..I will try to explain it to you... "
You are missing over half the story. True, supply overwhelmed demand but what magnified that carnage was a coordinated bear raid of naked shorts.
Yesterday you stated this,
“It has always been my contention that the "science" will always turn out to be the most important factor over the long haul...Not theFDA, not the TA Charts, not the market makers, but the science.”
It has jumped 48% over the past 26 wks. Shorts are covering and we are near a 'blue sky' breakout when an acceleration of price appreciation occurs rapidly.
Elk Hunting and Amarin. An elk hunter masters the art of deception to lure elk into his kill zone. Often I use a headless foam decoy – tied between two trees - like this:
Its function it to present the “obvious,” incite curiosity and distract a bull elk from other surprises waiting for him.
I think management is doing the same thing. IMO, the DMC probably said (when asked about the possible time frame), “We can confidently complete the analysis by August unless there are some unforeseen events that could prolong things a few weeks or so.” Management’s response, “OK, we’ll present a 6 month time frame in our guidance just in case delays are encountered.”
Amarin knows shorts/coordinated hedge funds have run the stock price to the basement and continue to restrain a rebound off the bottom. I think there is a good chance management will surprise the market with an announcement at the time of their next earnings call and thus force a massive short squeeze (remember the infinite counterfeit naked short sales? To cover, they need to borrow a share and buy it in the open market).
Knowing this timing would be probable, they quickly recruited the new CFO to assist with finances. A nod and a wink or two at a Fourth of July gathering, and we see the mysterious 6100 Aug. $3 Calls show up that BC thinks are normal (haha). JMHO, FFS
Yes, but does everyone know what's in store for the next earnings call??
Yesterday's Aug. $3 Calls were purchases:
Two weeks ago, there was ZERO open interest in any of the August calls.
Draw your own conclusions, but I think the vast majority of these were purchased by a novice who is looking to make bank on a wink from an uncle, father or friend in response to a question about why you left TARO for AMRN.
Marz: "I think naked shorting or counterfeit shares are being floated here in AMRN as you see in the last several days they finally bring the pps to almost flat each day at the end of the day."
No doubt about it. You can see where the hedge funds attack. The wait for light volume periods when they can move the price with less expense (short sales). Notice how their activity has picked up this option expiration week (their bashing full force too):
(red bars are after hours trading)
Their objective: crush all breakouts and break new trends.
Thanks for the info Benny. Open interest for the $3calls is sticking out like a sore thumb. It looks more and more like someone knows something positive is going to occur in conjunction with the next earnings report.
HD, I was simply drawing a comparison between a company that borrows money to buyback their own shares and governments who do asset purchases (buy their own bonds/QE) despite being trillions in debt. Both are perceived by investors as bullish
Ziploc, you mean like "raining money?"
Let's hope this momentum keeps rolling the pps upward :)
Buyback programs don’t need excess COH to be successful.
STS-
Share buybacks are almost always a pretty bad use of excess cash (something AMRN lacks) - only useful when a company is sitting on a massive cash pile
Buyback program were used when the relevant Co. is sitting on a ton of cash and they have to support the share (due to lack of organic growth.)
The company is currently running at a loss.
If you decrease the share count you will concentrate this loss.
You will have also added to the debt load ( if you were able to get financing ) .
Stock would tank .
Zip, maybe. A repurchase swats shorts out of the picture so that if the result is continuation, the downside is buffered. Then they focus on finishing the trial, a possible possible non U.S. deal, and ramping scripts + earnings.
HD -
1.) How the stock buyback "putting AMRN them in the green quicker"?
2.) How "it removes this “run out of money” worry/overhang"? The cash infusion from "partnership or from the acquisition of new debt to fund the stock buyback/tender offer" is COH neutral ...
BB -"Where's the cash infusion coming from?"
Either via a partnership or from the acquisition of new debt to fund the stock buyback/tender offer.
The benefits: it boosts EPS - putting AMRN them in the green quicker, fends off an acquirer, benefits executives, sends a strong vote of confidence by management to the street, and most of all, raises the undervalued stock price.
Either way, it removes this “run out of money” worry/overhang and allows the stock price to elevate free from manipulation.
Have another,.. Kiwi ;)
"FF A share re purchase ??" Yep. Show me an instance when Kalb has done otherwise. This is why they hired him. Sorry if it doesn't fit your dilution theory.
Michael Kalb, bullish for AMRN - connecting the dots:
What financing strategy will he bring to the table? Why him? Why now?
It is interesting to observe that while serving as the CFO for TARO, he was involved - and probably recommended - two share repurchase programs; one in late 2013, the other in March of this year.
Both were done in conjunction with earnings announcements. Both boosted share price – especially in 2013 subsequent to a long term price trend reversal.
Note how the share price took off and more than doubled as volume expanded.
Here’s another example (QLTI) of a Biotech co. that did the same thing to stem the slump of their pps as it threatened to fall below 50% retracement:
Connecting the dots:
I’m not sure AMRN can do a repurchase program unless they form a non-U.S. partnership with upfront cash. But if Kalb follows his past footprints, he would likely propose to do/announce a share repurchase program in conjunction with August earnings. Hmmm, … remember those 6100 August $3 Calls purchased the day after AMRN announced Kalb as their new CEO?
I can't think of a better way to shake off shorts. :) FFS
Naked shorting of AMRN…
We all agree (I think) that in order for this stock to rally (before and after interim), shorts must stop their attacks. Their raids in the past are obvious on the daily chart. However, lately, their attempts have been less successful and I believe their efforts will continue to dry up moving forward and allow the pps to rise with greater ease and magnitude.
When naked shorting is used and abused on a stock like AMRN serious technical damage results, as we’ve all witnessed the past few years.
Perhaps they’re operations are coming to an end?
Background:
Naked Short — This is an invention of the securities industry that is a license to create counterfeit shares. In the context of this document, a share created that has the effect of increasing the number of shares that are in the market place beyond the number issued by the company, is considered counterfeit. This is not a legal conclusion, since some shares we consider counterfeit are legal based upon today's rules. The alleged justification for naked shorting is to insure an orderly and smooth market, but all too often it is used to create a virtually unlimited supply of counterfeit shares, which leads to widespread stock manipulation – the lynchpin of this massive fraud.
Fails–to–Deliver — The process of creating shares via naked shorting creates an obvious imbalance in the market as the sell side is artificially increased with naked short shares or more accurately, counterfeit shares. Time limits are imposed that dictate how long the sold share can be naked. For a stock market investor or trader, that time limit is three days. According to SEC rules, if the broker dealer has not located a share to borrow, they are supposed to take cash in the short account and purchase a share in the open market. This is called a “buy–in,” and it is supposed to maintain the total number of shares in the market place equal to the number of shares the company has issued.
The Anatomy of a Short Attack —
Abusive shorting are not random acts of a renegade hedge funds, but rather a coordinated business plan that is carried out by a collusive consortium of hedge funds and prime brokers, with help from their friends at the DTC and major clearinghouses. Potential target companies are identified, analyzed and prioritized. The attack is planned to its most minute detail.
The plan consists of taking a large short position, then crushing the stock price, and, if possible, putting the company into bankruptcy. Bankrupting the company is a short homerun because they never have to buy real shares to cover and they don't pay taxes on the ill-gotten gain.
When it is time to drive the stock price down, a blitzkrieg is unleashed against the company by a cabal of short hedge funds and prime brokers. The playbook is very similar from attack to attack, and the participating prime brokers and lead shorts are fairly consistent as well.
Typical tactics include the following:
1. Flooding the offer side of the board — Ultimately the price of a stock is found at the balance point where supply (offer) and demand (bid) for the shares find equilibrium. This equation happens every day for every stock traded. On days when more people want to buy than want to sell, the price goes up, and, conversely, when shares offered for sale exceed the demand, the price goes down.
The shorts manipulate the laws of supply and demand by flooding the offer side with counterfeit shares. They will do what has been called a short down ladder. It works as follows: Short A will sell a counterfeit share at $10. Short B will purchase that counterfeit share covering a previously open position. Short B will then offer a short (counterfeit) share at $9. Short A will hit that offer, or short B will come down and hit Short A's $9 bid. Short A buys the share for $9, covering his open $10 short and booking a $1 profit.
Marzan, I have a few of these stocks that end up on the 'pink sheets.' Not one of them over the years has ever come back. Sorry, that is probably not what you want to hear but it is what HFs do; they kill stocks on bad news. Personally, it was healthy for me in the long run to erase them and move on, knowing that winners would eventually emerge to compensate :)
Century, sorry to hear of your loss. I too have suffered many losses over the years from this same kind of activity.
JL, very interesting, thanks. 2008 illuminated the twisted evils on Wall Street. However, restrictions were short lived and regulations failed to come about to prevent the reasons behind the bank failures. It was like a Doctor telling the patient they are not to cough for 30 days and then failing to treat the underlying pneumonia.
Short sellers are alive and well. There are more hedge funds today that there were before many failed post 2008. Their freshest meat exits in the Biotech space (small caps). Though some of AMRNs short position is attributed to debt neutrality, the vast majority exits to exploit Amarin's unfortunate events in the past. They smelled blood and piled on. Here is a good article about naked shorting of biotech companies:
Illegal Naked Short Selling Appears to Lie at the Heart of an Extensive Stock Manipulation Scheme
Another good article (IMO) that presents legitimate reasons for AMRN shorts to be nervous:
Is Amarin Corporation Plc Stock About to Double?
The unwinding squeeze has begun.
JL-
So we may not see the institutions moving in as early, because they have long memories...
As the hedge funds scrambled to buy the last few available shares to close out their shorts the share price of Volkswagen shot to stratospheric levels making it the most valuable company in the world for a very short period.
isaeed, I beg to differ..
I have a feeling this will not move up into interim results. I am hope I am proven wrong. The market does not seem to be buying it.
The AH jump is due to the Biotechnology Small Cap index (BIOSC) re-balancing after the close on Friday:
INDEX REBALANCE SCHEDULE
Thanks Dancing.
Appreciate your insights.
I hope we don't awake one day and discover we've been in the "Hotel California" all along: "..You can check out anytime you like but you can never leave..."
Raf, very good point. Maybe Kalb's children/friends purchased the August Call options based on his career change and the 'eye winks' they received regarding the near future of Amarin/AMRN.
Dancing in the dark, Isn't it prudent to have prepared steps for all dances?
BTW, I was responding to Raf who questioned what my plan was IF continuation results
Interim stop.
If the announcement is continuation, I'll exit half on a close below the 50% retrace of the run from the Feb. low to the pre-interim high and then plan to re-load much lower (If it can't hold this retrace, it will probably slip to 2.00 until they refinance their debt) while waiting for the final results (What Kiwi's banking on).
The other half is hedged against such a fallout.
My trade management strategy
I am committed to hold out for the interim results. If positive, we’ll see a large runaway gap.
From researching the price response of other binary event stocks, I have developed a profit exit strategy that will enable me to take nothing more and nothing less than what this stock is willing to give – whether it involves a go-it-alone or buyout scenario.
My plan:
1. Sell 50% on a close below the 21day EMA (post breakout).
2. Protect the other 50% with a stop loss just below the 50% Fib. retracement level (I will re-enter a half position on a successful reversal from this level)
3. Hold position until a lower high, lower low develops on a daily chart.
4. Place a hard stop below this point. Walk away. The work is finished.
Adhering to this plan in this way will allow me to execute my plan free from emotion.
Marzan, yes, S is an identical squeeze pattern to AMRN. Both have broken above their down trendlines, followed by retests, and now appear to be busting loose to the upside on expanding volume – fueled by high short interest ratios (S =15.77).
Nah, they just dropped $42,000.00 on 6100 calls with ZERO open interest because the money was burning a hole in their pants.
August $3 Calls
Been thinking about the odd Aug $3 call trade yesterday. Someone or possibly a few people (relatives?) put up $42,000.00 in the hopes their investment will make good by August 19th.
Two possible scenarios:
1. The trade was place by one person (naive about trading). He/she probably called a broker and said, “I have 42k to invest, please buy me a cheap out of the money option with an August expiration.” This person obviously knows something positive is going to happen before the projected interim readout (partnership, forthcoming news, early announcement??)
2. My platform won’t let me trade more than 2000 contracts at a time, so perhaps the trade was placed by more than one person (relatives in the know?); 2000, 2000, 2000, 100 respective trades?
For them to choose an expiration that is a month earlier than the projected announcement makes me more confident that they know something. Something that gives them an assurance their bets will pay off.
Even from a TA standpoint, the price objective of this pattern is 4.50:
If BC’s stairway to heaven changes trajectory as a result of taking out the previous high, or news, or magnified squeeze or all the above, then we easily reach 4.50 and close the Oct/2014 gap by August. If that were to happen, that 42k investment would be worth approximately $900,000.00! Come August the investor/investors could either sell the calls or have the shares called to them (each contract is worth 100 shares priced at 3.00!) and then hold through the announcement of a halt. This is a great way to cheaply leverage the runup to interim and/or get a lot of shares at a potential discount. It also provides a nice cushion against any price slump if the trial is not halted.
Yes, and I believe this is how it will show up: by a trade that sticks out like a sore thumb.
Thanks jeerio. Do you agree, this is a very risky trade (based on expiration and vol of contracts) probably executed by someone not familiar with options?
Thanks. 6100 $3 strike contracts is interesting when the open interest is only 254 and only a very few Aug. calls have been purchased. This is an Amateur trade, like a relative of someone in the know as to whats about to happen.
Why is the open interest on the Aug. 19 $3 the same as yesterday?
The “Futures” don’t look bright…
An ominous broadening top (“megaphone top”) pattern has developed on the S&P 500 futures chart (daily):
50% retracement of the Brexit plunge happens to be the midpoint of the expanding pattern where it is typical to see a rally fail and markets fall to fresh lows.
This is a good day to sell into strength - except AMRN of course.
Michael, we are pressed up against resistance and sellers are absorbing the buying. Once those sell orders are exhausted, it will break to a higher level and move with greater ease (as long as the strong bid remains). That usually happens at the close when shorts cover and capitulate.
Market action:
I wish I had more confidence this broad market rally will continue but I don't. Margin calls from Friday are due tomorrow,
Hopfully AMRN will begin to show more immunity against further market deterioration. I'd love it if we had a leak or two or some news here to keep the momentum following through.