Replies to post #29448 on NorthWest Biotherapeutics Inc (NWBO)

[CaptainObvious]

Maybe AF is pounding away on his typewriter, and has been loading up for bear.

[Milou2]

I agree. Either something is very wrong, or we are witnessing the bears falling into a trap with a resulting short squeeze that will be remembered for a long time. One way or another, someone will get hurt but it will be interesting to watch if you are on the right side. The type of trading we see from time to time at the end of the day, including today, makes me think that the shorts will be sorry. Stay tuned...

[TZOR]

How do you know they aren't covered with options to control tail/outlier risk? Have you ever heard of options? Do you realize that large financial institutions use options as insurance policies? Are you aware of hedging? Do you know the answer to every question I presented? Are you not worried that you don't know the answer to every question I asked you?

[koman]

The buyers of Northwest's convertible notes want the company's stock price to decline before Feb. 15, 2015, because a lower stock price will also drop the conversion price of the debt when it resets. A lower conversion price means note holders get more and cheaper Northwest shares to sell when they convert the notes. The Northwest debt holders also make extra money by shorting the stock and covering lower.

Let's say the reset on Northwest's debt took place last Friday instead of on Feb. 15, 2015. Northwest shares closed Friday at $5.45, so 110% of $5.45 is $5.99. That's lower than the $7.30 original conversion price, so the reset price on the notes would be $5.99. If holders converted $17.5 million in notes at $7.30, they'd receive 2.4 million shares of Northwest stock, in aggregate. At $5.99, the $17.5 million in debt converts to 2.9 million shares, or a 20% increase in dilution.

http://www.thestreet.com/story/12885672/1/northwest-bios-almost-toxic-debt-raise-responsible-for-stock-slide.html?puc=yahoo&cm_ven=YAHOO

This is a quote from AF and may explain some of the recent price action. I'm expecting some short covering next week barring any news beforehand.

[gnawkz]

Hi Steppen,

Shorting is not as straightforward as most investors believe.

There is a SeekingAlpha article that provide a lot more depth into the different methods for shorting a company and how to profit from it. Can't seem to locate it right now.

But one example is that sometimes big funds purchase shares not because they believe in the company, but rather there are big fees to be earned by providing the market with additional share count liquidity.

Another example is that a funds begins stockpiling shares in anticipation of shorting (due to share liquidity concerns).

The point is that there are numerous ways to directly/indirectly own shares, thus making it difficult to truly understand the underlying motive of any investor, whether short and/or long.