Is anyone else here bored?
As an exercise in ennui relief, lets talk about naked shorting.
It is an activity that has been blamed for many of the tribulations of DNAG but has seldom had any supporting evidence. I think possibly things may have changed recently.
Consider the process of naked shorting. A 'seller' sells a number of shares to the market. Shares he doesn't actually have. After a period of time during which the stock price drops, the seller buys an equivalent number of shares, covers his sale and pockets the profit. All pretty simple, so far.
It is assumed by these boards that 'shorters' have a vested interest (lol Jbear) in driving the price down in order to protect their sale. Obviously if the price goes up they will lose money if they have to cover their sale after the price has risen.
This is where it gets interesting. Consider the possibility (only the 'possibility') that naked shorters do not necessarily want the price to fall immediately. Maybe it's not who you think it is. Sounds crazy doesn't it? Well bear with me.
Since the R/S occurred and the One billion share OS was transformed into about 60 Million shares, there has been continuous dilution. Dilution that we were told would happen, so no surprise. The trend since then has been continuously down, although there have been a couple of bumbs in the graph. Also since that time we have taken up a membership on the SHO list. One of the indicators that shorting may be taking place.
In the past couple of months shares have been added to the OS at a rate that has been unprecedented until now. We are currently showing an OS around 150 Million shares. The equivalent of 3 Billion shares pre-split. That’s over 2 Billion pre-split shares added to the OS in just a few months. There are still 1.35 Billion shares left that are available in the AS, the equivalent of 27 Billion pre-split shares. While there is no indication that they will all be used, they are nevertheless available. Given the continuation of the dilution as a necessary source of funds, it is no leap of faith to assume that the downward pressure on the pps will continue.
Given these conditions, consider the possible strategies of the shorter. His profit depends on the difference between the price he sells at (obviously the higher the better) and the price he buys back in (lower is better). He therefore has two options to maximize his profit. He can follow the tried and true methods of selling his 'naked' shares and then bashing until the inevitable price decline grants him a favorable profit. Or, and this is the part that might seem counter-intuitive, if he 'knows' that the price will inevitably fall regardless of his help due to the overwhelming pressure of the dilution, he can play it from the other end. He can exhort everyone to hold their shares and buy the deals, realizing that holding the pps up as long as possible while he sells into it, will provide a much better yield than he would get if he bashes the stock down. He knows that the price will decline no matter what tactics he employs, but he can get a better sale price if he can convince others to support his 'sale' price for as long as he can.
What do you think….possible?
Such a person would probably have a couple of aliases and would most likely reside in a country where naked shorting is legal, say Canada. He and his aliases would have shown up in the last few months and would have already posted hundreds of messages in support of the buy and hold strategy. Some of the aliases might have announced that news was coming over and over, in order to try to maintain interest. Such participation would have coincided with the entry of DNAG on the SHO list.
I wonder if there are any posters on this board who fit that description?
Too bad we can't use DNAWitness to track them down, (if they exist). LOL
Anybody got any thoughts?
Regards,
frog
AI
