One Step Ahead

[rbitulsa]

You gotta love it

http://www.knight.com/InvestorCenter/vsADSC.asp

Knight admitted trading over 90 billion CMKX shares in Feb '04 alone - ~25% of their total shares for the year in one month. I don't think they were too keen on admitting future month's trades of CMKX - but all you gotta do is look at the chart and ask yourself where else it could've come from. How many other stocks are out there that could've accounted for the volume past Feb., noting that the average number of daily trades did not go out of proportion during the same time:

http://www.knighttrading.com/MediaCenter/PressReleases.asp?releaseID=664599

Note: on Knight's financials - notwithstanding the 79 million they paid in fines in '04 - they made 79.5 million in income from continuing ops. It's really nice to see that their [Liability: Shares Sold Not Yet Paid For] - grew by 50 million to over 220 million dollars AT MARKET VALUE.

So, looking at the volume graph above, and wondering how much of the 220 million dollars of "shares sold not yet paid for, at market" might be from CMKX... wondering if their "shares shorted" are proportionate (from company to company) to their shares traded? within in the wide realm of possibilities, I wonder what might happen to Knight's balance sheet if CMKX went to .0004, or .002, or .01? How would that look on Knight's balance sheet?

example: we know that at LEAST 25% of the shares Knight traded in '04 were CMKX shares (from Feb '04 alone), if 25% of 220 million = $55 million / .0002 (market) = how many shares of CMKX might Knight have "sold, not yet purchased"?

Answer: it wouldn't look pretty, unless of course, they're equally long...

there was an article today on Knight and their Deephaven hedge funds - worth reading - they dumped 100 million more in their Deephaven hedge funds on Jan. 1st.

food for thought