Guys... a dividend, be it stock or cash would not require a CUSIP change.
Yes, an event requiring a CUSIP change would surely force share accountability and accomplish the company's goal of bringing the naked shorts into the light of day. While a dividend, be it cash, stock, or tickets to Disneyland may not FORCE naked shorts to cover...
it would certainly induce pain, possibly unbearable pain.
Look what FHN just did… for admittedly different reasons. FHN declared a stock dividend on July 22 for stockholders of record September 11.
When I analyze situations like the one we’re in I always find it helpful to put myself in the shoes of one’s actions I’m trying to predict, so let’s pretend it was SPNG instead of FHN that just declared this stock dividend and role play here for a second…
Let’s take Broker A (let’s call him SnapperHead), who is holding a short position of 1,000,000 shares and has failed to borrow such, in an attempt to drive the share price into oblivion like he has with so many micro-caps. Let’s assume this is an organized attack and there is more than one entity holding naked short positions, and SnapperHead knows and works with these entities. These guys would probably stick together folks, right? If SnapperHead covers for whatever reason he had better tell his buddy, BoneHole, or he will not have any buddies for long.
Honor among thieves, right? Right. SnapperHead is going to cover first, and then make his call. “Hey BoneHole, I just covered my SPNG position, figured it was inevitable anyway and didn’t want to be the last guy looking for a life vest. I don’t want to be holding this position on Sept. 11 when I have to buy shares to satisfy this dividend. It’s gonna be cheaper to cover now… this company ain’t going away… I suggest you do the same.”
At this point these guys begin breaking ranks. Now it’s every man for himself as 1.5 billion monkeys fight for a few hundred million bananas.
Meanwhile, every mo-mo penny playing daytrader is in on the feeding frenzy too. Hell, I’ll probably be trying to buy more myself.
Folks, if what we’re being told is true, these shares (bananas) aren’t available. If you consider nothing else, consider what happens when demand completely overwhelms supply… and yes it can happen.
If what we’re being told is true.
I’ve talked to several investing type buddies on this one and I maintain that this security is going to go one of two ways and there is no in between. Either longs are going to lose a lot of money AND people are going to jail, or those longs that have done their DD, have stayed the course, and have believed management will be rewarded handsomely. I know that M&M have a great deal of individual wealth outside of Spongetech, and I have a real hard time believing they would risk roommate status with Madoff to earn money they’ll never get to spend.
Regardless of the outcome, I predict we will read about this story for years. I cannot see a vanilla end-game here, and if you hold this stock you are part of this story.
So, despite the increased A/S, (which incidentally gave me great pause), I am long, and I say… STAY THE COURSE.
Good luck to all,
Bob in San Diego
AI
