Well Janice hit the primary way these work but you are on to something here about these illiquid ones that have already done their opening dilution and went to par value and or completely illiquid. A good case is SUFF this week, that forum is lucky to see 4 posts in a month yet promoters spammed the living crap out of that forum before open with nearly 400 posts on Monday. This security already did the RM, the massive PR campaigns and it completely fell apart and went illiquid 8 months ago.
Now, this security has a long distinguished history of “rinse and repeat”, it was INCL and then ENTK before it became SUFF. Plenty of RS in there, plenty of sucker “super” longs to boot. The problem with “super” longs is they feel what is the point of selling their worthless shares and therefore this results in that illiquid environment I am talking about. The company had no new notes, stopped PRs, allowed their registration to expire in NV and pretty much disappeared until Monday.
So where does it all come from? Well I noticed a couple of “traders” sniffing around a couple of months back and they started up ticking the PPS with small trades. But because the “super” longs are not dumping the liquidity has to come from somewhere. If you ever look on L2 there is in no Bid and no Ask represented for the majority of time. This is an unsolicited quote security, which just makes it even worse. So promoters likely convinced the company to issue shares for “debt” purposes to create some liquidity to “manipulate” the PPS up to create an accumulation illusion.
Now preloading away the promoters need a good scheme to dump into here, so they convince the company to update their filings on OTC get that current information tier and then of course start their campaign over the weekend to create enough volume for the promoters and the insiders to dump their shares into. What barely traded 100,000 shares on average with 2 million on the high side now traded 20 million shares in one day.
The company insiders likely converted preferred shares since it has been two years since SUFF took over that ticker. So a source of liquidity right there, unfortunately an unsolicited quote stock has no other forms of liquidity other than “dark pool”, which is the typical note, debt or warrant holder. No MM can make a market in an unsolicited quote security, they cannot even use the often misunderstood “internalized” order process, that is often spewed across these boards.
The reason I bring this all up is a poster called “Lowtrade” was berated on his concept of dilution being the catalyst to causing these huge spikes in PPS. Dilution is often correlated with decreasing PPS, but what people fail to realize is that “super” longs will not sell, and without shares in play there is no market. Without a bit of dilution to grease the wheels the fast acting pumps cannot work. The promoters are not about raising the PPS to allow the “super” longs out, meaning buying up the Ask. It is much simpler to get the company to release shares and try to contain the PPS.
Most of the Super longs on SUFF were holding out for .01 and above the PPS did not even make it there because the promoters and insiders were dumping feverously into the instant volume created by the pump crew. They cleared nearly $90,000 in dollar volume that day. Pretty good on such a non-existent trade security that had little exposure.
