Replies to post #213176 on Biotech Values

[linhdtu]

well, the way i understand the shoe is like this: so the squid (and friends) is supposed to sell 8 Msh fgen at 40.75. like you said, the squid has already lined up parties willing to buy the new printed shares which go straight more or less from fgen printing press to their new owners. that is how the sqid earns its fees from the process.

in most cases of secondaries however, the mkt price will fall below 40.75 and to prevent the mkt price from sinking too much below 40.75 (which will piss off the new owners and tarnish the squid reputation lol) the squid (and friends) will try to support the mkt price through direct intervention in the mkt. but these brokers have to be mkt neutral. after all they don't want to be stuck with an inventory of fgen sh. so to be mkt neutral, they buy to support and short it also. how they do it both , i have no idea.

thus if the brokers do need to even up their shorts, they use the shoe.

[mazlat10]

If they underwrite it then I.M.H.O. they short it at the offering price so they would not lose money.. there is no other way a company would underwrite a stock and risk losing tones of money because of a 3 percent comisson..........