Some thoughts on ELRA and VNDM trading.
Note: I wrote this post while VNDM was still on the ask, and I wrote it specifically to ward off any concerns that might arise if VNDM holds the price down. Apparently by the time I had finished writing this, instead of VNDM scaring away us, we had instead scared VNDM away. Still, I post for my own vanity...
I've been puzzling over why VNDM is hanging on the ask the last few days, especially now that the buying pressure is on. Every time somebody puts in a retail buy, VNDM is there with a seemingly endless supply of shares. I want to know who, and why.
Now the obvious answer is - Dilution. But I don't think the facts back up that answer. Here's why:
Rmuncast was the first to notice (well, ok, I'll brag, I had already noticed too), that the answer the TA gave me on the number of outstanding shares did not match what the company just stated in the interview. The company said that as of February 2014, there are 38 million shares outstanding. The TA answered me that there are 42 million shares.
Now we know that the 42 million is greater than the 30 million listed from last... November?, and so yes, there was some dilution. And we can also reason that the 38 million is probably from early this month, while the 42 million is from the 21st, so yes, there's been recent dilution as well. As stands to reason, the dilution is continuing.
But here's the kicker. I just emailed them yesterday and got a response back. 42,415,585. The exact number of shares as from the 21st.
Now there's 3 possibilities to consider:
1) The Transfer agent is lying. We've pretty much discounted that option as he's not an employee of ELRA, and has his own reputation at stake.
2) The Transfer agent did not understand my request, and simply gave me the latest figures. But I specifically asked how old the data is. I said "Is this data a month old, a week old, a day, how current is it?" He answered "The figures are from this morning." If he didn't understand my request... well, I don't see how he could have.
Or 3) There is no further dilution.
I think I have to go with #3. There has been no additional dilution during the last week. I'll email them again in about a week just to make sure.
But if it's not dilution, then what in the holy heck is VNDM doing?
Well, I have a theory on that.
I've been watching carefully how VNDM has been acting of late, and also how posters are reacting to the price action. After all, stock trading isn't about the companies or the charts, it's all about how people react. Learn to judge people's reaction, and you'll make money on your trades.
I particularly took note of one poster who said "VNDM is sitting on the ask, and until he let's it move up, this stock is going nowhere". That's when I began to really question VNDM's motivation. Up till that point, I just assumed he had a bunch of shares to sell and was just doing his job, though I don't know why the seller wasn't letting it run and then sell out at a higher price. Even if it *was* dilution, wouldn't the company rather sell their shares at 5 cents instead of 3?
But then I looked at those big trades and I pieced it together. This is not about the selling... it's about the buying. Someone wants shares, and he wants them cheap. The only way to keep them cheap is to not allow the price to go up. So he's betting that if he sells a few now, he'll kill the run and keep the price low, allowing him to buy all he wants as people bail.
Consider this for a moment. How many ELRA stockholders have considered options for their exit strategy in the last week. I noted one stockholder saying he'd bought at 8 cents, and was thinking he'd take the next run up for whatever it's worth and write the rest off as charity. What if VNDM kills this run at 4 cents, you gonna take your exit then? Well whoever the big buyer is, he's happy to claim your shares when you exit.
And all these new buyers having entered in the last day? They see the rally fizzle and they can still step out with most their skin intact. Mr. Big Buyer is happy to help you out.
I was further convinced of this by watching just how aggressively VNDM was pushing the ask down. VNDM had backed off to .034, and NITE put up a seller at .0335 for just 48K shares. Rather than letting those paltry 48K shares trade through and then continuing their sell at a higher price, VNDM dropped their ask down to .033 and got ahead of NITE. NITE had to drop their asking price again (and VNDM dropped theirs again, driving the ask down until someone finally took out NITE). VNDM was willing to give up thousands of dollares (the mere 1-2 tenths of a penny over a couple of million shares really adds up), just to force NITE to give up a few dollars more for their seller.
I can only see this as VNDM doing their best to keep the price down, to scare the buyers away and scare the sellers into bailing, and I can only see this as a ploy for their big buyer. Those huge T-trades at the end of the day? I suspect those are all going to Mr. Mystery trader, collecting all he can get.
It's a gamble for sure. What if the buyers keep up the pressure, forcing VNDM to give up more than they wanted to risk. After all, if they are *accumulating*, they're doing it wrong by *selling*. They need to keep the price down so that everyone that just bought yesterday and today will lose heart and sell out on Monday and Tuesday. But I think that's exactly what VNDM is counting on.
Unless of course, the buying pressure is too high and VNDM gives up.
Edit: Which, apparently they have. :D :D :D :D
AI
