nice explanation by Jason Nevader (author of SA article) about the share buyback:
China-Biotics (CHBT) has the Goods to be a 5-Bagger [View instapost] A Company can't announce a buyback and act on it while it is in possession of material, non-public information because they would have an unfair advantage over other investors. When they announced the buyback on July 7th, CHBT was aware of its fiscal 1st quarter financial results. After the results are announced on August 9th, the Company's blackout period will be over and they can start buying back shares. The good news is that the company can put in place a 105b-1 plan, whereby they can instruct their hired broker/dealer to buy a set amount of shares below any instructed price over the next 12 months without any blackout periods. Therefore, they won't have this problem again for the next several earnings releases.
Here is a link to a PDF that explains SEC RULE 10b5-1.
www.dorsey.com/files/P...
Therefore, you have the potential for an interesting couple of weeks of trading:
This week: The shorts will want to start covering because there are two catalysts next week, earnings on Monday and the Company buying back shares.
Next week: If the Company has another fantastic quarter of year-over-year revenue and earnings growth, the stock should advance and shorts could drive the stock even higher on a short squeeze. However, if investors "sell the news", the Company will be in position to set a realistic floor to the stock price by starting their buyback, which will make shorts want to cover as well given the Company's ability to buy up to $20 million of stock.
