Replies to post #10124 on Masterbeat Corp (MSTO)

[Afterhoursearnings3]

Keep in mind that as a broker there are ways around public reporting of those numbers. I do not think it was a short, but a cut and run or a company sale. However the borrow rate is 0.3% with a rebate fee of 2.02% currently which is cheap, so selling can be profitable and easy to hold for days. Let me give you an example that happened this week. At market close on 9/9 at 17:45 there were 4.9 million shares available to sell short. On Monday morning 9/12 at 0800 there were 0 shares to sell short. At 11:15 on 9/12 there were 4.9 million available to borrow again without any corresponding volume on the exchange. Now keep in mind with a large enough pool of shares a broker can just lend out however many they deem fit for sale and just collect the rate, or just sell air and wait for someone to fill the bit 20% lower a few days...or weeks later. Now if the broker has enough shares to still keep the initial amount out on loan and add more for others to borrow...why wouldn't they do so? Easy money and it can start even greater downwards pressure.
Now in June there were several multi million share failures to deliver aka failure to produce the shares when asked by the broker who lent them. Funnily enough (or inevitably enough) the fee rate to borrow started to rise at that time. Now if you look at the shares available to short data going back 6 months, we see about half of the shares available to short being out on loan at any given time. It can be profitable to play these types of games, particularly if you have shares to lend.
Lets keep in mind what broker regularly sees the largest dollar volume of trades on the OTC...Citadel. In fact they funneled the largest volume on the exchange today 99million buckaroos. One should realize they rarely target a particular stock but have programs that run short trades like this and auto execute. Again, way more likely some dude just bailed or the company sold a few for cheap.
That being said, we have both been around the OTC long enough to see a volume spike crazy large quicker than any group of guys could hit the ask. Happens when large short positions stay out for a long time by a broker or a few brokers, just collecting the fees passively until they catch wind of material news that will greatly increase demand. Then BAM, all the shares get bought back (called back) at once. We have both seen it happen and we will again.
Will be watching the float to see if we can see if it was company or not.