One Step Ahead

[Ignutz]

Why the Shorts Have Long Faces- Business Week Magazine February 28, 2005.

This one paragraph I found interesting. Not only do MMs rip off investors, they rip off fellow MMs. LMAO, check out this small excerpt from the article:

Since early January major stock exchanges have had to publish daily lists of companies for which sellers have failed to deliver sizable amounts of stock to buyers in a timely fashion.

That situation often arises when traders engage in what is known as "naked shorting". Normally short-sellers have to borrow stock before they sell it. But sometimes brokers execute a short sale without having a firm arrangement to borrow shares-and then find they can't locate the necessary stock.

The new regulation is prompting brokers who can't deliver stock within thirteen trading days to close out customers' short positions.

The daily lists signal to other traders that they can pluck profits by mounting a short squeeze in stocks, such as Martha Stewart Living Omnimedia, that are already moving up on positive news.

For example, ParkerVision, Inc., a Jacksonville maker of wireless devices has seen its shares soar 62% since it appeared on the list in early January.

"If you have a small cap stock with a huge short position on a list, you just raised a red flag for potential manipulation," says Jeffrey Meyerson, a vice-president at Crown Financial Group, a Jersey City (NJ) brokerage firm. [LMAO, these guys are out of business from it probably so they'd know]

Some short-sellers contend that brokerage firms are already trying to profiteer from the new rules by slapping extra fees on hard-to-borrow stocks. At HarrisDirect, a division of Chicago-based Harris Bank LLC, investors who want to short Internet travel-offer publisher Travelzoo, Inc. must pay an extra fee of $31.40 a month per 100 shares they want to short!! [LMAO the peeps even rip each other off]

For Cal-Maine Foods, Inc., an egg producer that rode the Atkins Diet craze to new heights, the cost of shorting has risen to $3.00 a month per 100 shares on the $10.00 stock. Harrisdirect's chief operating officer, Michael Hogan, says the company is simply passing along the fees it's now being charged by large Wall Street firms.--- this was only an excerpt.

Original article written by Dean Foust in Atlanta

http://www.keepmedia.com/pubs/BusinessWeek/2005/02/28/730430?extID=10026