Replies to post #14609 on Direxion Daily Financial Bear 3X Shares (FAZ)

[Porgie Tirebiter]

The Facebook IPO is a big deal for FAZ.

“Company filings after the market closed on Friday night however revealed the extent to which the banks who led Facebook’s initial public offering – in which $16bn of shares were sold to new investors – were forced to move in to the market and buy shares in order to keep the price above the $38 level. Morgan Stanley, Facebook’s lead financial adviser, ended the day with 162m shares, worth $6.16bn. Other banks including JP Morgan and Goldman Sachs also bought shares, ending the day with $3.2bn and $2.4bn holdings respectively.

http://www.forbes.com/sites/timworstall/2012/05/20/the-failure-of-facebooks-ipo/

Some of these shares may represent shares contracted to institutions which haven't been delivered yet. But the fact that the underwriters had to enter the market at all is an ominous sign. If shares decline below $38, not only will these institutions miss out on the big dollars they were counting on, this could turn into a serious loser for them. These are long stock positions, there is no hedge.

Morgan Stanley, the lead underwriter is not very big in the RIFIN, but JP Morgan and Goldman Sachs are big components.

Watch FB share price for guidance regarding FAZ/FAS on Monday.