AI
Wednesday, August 06, 2008 10:25:39 PM
one point i'd like to add about the quiet period -- we haven't had too many posters on the board calling for dramatically lower prices, perhaps one or two. but there's some uncertainty in the market right now imo and we would do well to lean on logic rather than emotion. here's the case i would make for why i think the stock is about to rally, not trend lower:
we've been talking about the registration statement for weeks now. imo the S-1 has been filed with the SEC, and management is waiting to receive comments on it. it's my understanding that when the "form effect" is filed it will mean the registration statement is officially submitted, has been signed off on by the SEC, and all the owners of the private placement can now trade their shares freely. this will happen no later than 9/4/08.
with this as the current backdrop, let's assume a worst case scenario (as one poster mentioned) where private placement shareholders might be shorting against their own blocks of stock. why would they do such a thing? essentially this strategy would be taking at most a 100% profit, and then killing the goose that laid the golden egg. DR invited these investors to the party, and that would be taking away the punchbowl imo.
so who is behind the recent price action? clearly there is selling pressure, and we've seen the reg sho list. it appears prospect capital may have been short, and unlike the PP holders, PSEC's interest in the company may well be diminished, now that DPDW no longer needs access to high interest cash.
if any MMs went naked short to facilitate PSEC's (possible) short against their block of recently converted warrants, these MMs may now be in the process of covering. as they do so, i would expect to see us rally off the bottom.
during today's trading the ask was unusually thin. we had a fake wall at .70 that fell on very low volume. progress since .70 has been in near nickel increments. so the evidence does suggest a parting of the clouds.
yes, this seems bullish when viewed in isolation, but stepping back to view the bigger picture, i have to think in terms of what is most profitable longer term, and that scenario is even brighter. think about it: would DR expose their entire universe of investors to DPDW for months via their research, and invest some of their top institutional clients to the tune of $40M, only to torpedo the company's stock for a short term gain?
or would they even drive the price down to .35, as one poster suggested, a full 50% below where the private placement was negotiated, and risk alienating the entire retail component of the stock? i doubt it. imo if we dip even slightly below the PP buy in of .70 the larger players will step in and support the stock, just as they did this morning in the low to mid .60s.
what makes the most sense to me is that DR or their invited guests wouldn't short us, they would do just the opposite: wait for the form effect, and then hit the stock hard, pushing it to fair market value as DPDW can once again issue PRs. i predict the end of the quiet period will be really loud... and lots of fun.
if anyone agrees or disagrees with my theory i'd like to hear your take on things.
we've been talking about the registration statement for weeks now. imo the S-1 has been filed with the SEC, and management is waiting to receive comments on it. it's my understanding that when the "form effect" is filed it will mean the registration statement is officially submitted, has been signed off on by the SEC, and all the owners of the private placement can now trade their shares freely. this will happen no later than 9/4/08.
with this as the current backdrop, let's assume a worst case scenario (as one poster mentioned) where private placement shareholders might be shorting against their own blocks of stock. why would they do such a thing? essentially this strategy would be taking at most a 100% profit, and then killing the goose that laid the golden egg. DR invited these investors to the party, and that would be taking away the punchbowl imo.
so who is behind the recent price action? clearly there is selling pressure, and we've seen the reg sho list. it appears prospect capital may have been short, and unlike the PP holders, PSEC's interest in the company may well be diminished, now that DPDW no longer needs access to high interest cash.
if any MMs went naked short to facilitate PSEC's (possible) short against their block of recently converted warrants, these MMs may now be in the process of covering. as they do so, i would expect to see us rally off the bottom.
during today's trading the ask was unusually thin. we had a fake wall at .70 that fell on very low volume. progress since .70 has been in near nickel increments. so the evidence does suggest a parting of the clouds.
yes, this seems bullish when viewed in isolation, but stepping back to view the bigger picture, i have to think in terms of what is most profitable longer term, and that scenario is even brighter. think about it: would DR expose their entire universe of investors to DPDW for months via their research, and invest some of their top institutional clients to the tune of $40M, only to torpedo the company's stock for a short term gain?
or would they even drive the price down to .35, as one poster suggested, a full 50% below where the private placement was negotiated, and risk alienating the entire retail component of the stock? i doubt it. imo if we dip even slightly below the PP buy in of .70 the larger players will step in and support the stock, just as they did this morning in the low to mid .60s.
what makes the most sense to me is that DR or their invited guests wouldn't short us, they would do just the opposite: wait for the form effect, and then hit the stock hard, pushing it to fair market value as DPDW can once again issue PRs. i predict the end of the quiet period will be really loud... and lots of fun.
if anyone agrees or disagrees with my theory i'd like to hear your take on things.
