Unclever & Helpful/Very Interesting
I remember that, when I first stated my conclusion that the paticipants in Wave's private placements were locking in risk free arbitrage profits by shorting against the box prior to a placement, there was skepticism about this concept by some here. Of course, since that time the participants on this board have become reasonably sophisticated in understanding the mechanics of these placements. While advance trading based on knowledge of an impending placement may be illegal, it still has been an all too common practice.
We need to recognize that Wave management has undoubtedly understood how this process works all along. By using these arbitrage sharks, Wave can quickly issue more stock in what is in effect a sort of mini public offering. One downside is that the strike price for a placement is generally being set at the same time that the placement participants are doing their anticipatory shorting, which creates an incentive to short in a way that depresses the price. Wave management can try to counteract this process by timing good PR with an impending placement. Still, it would be nice if the time comes when most of the participants in a placement are real investors instead of arbitrage sharks.
AI
