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Post by mnholdem on Mar 16, 2015 12:20:40 GMT -5
We always hear about the "bear raids". The Goldman-Sachs downgrade immediately followed by selling to drive down share prices. We also know that, as of the last NASDAQ report, MannKind has 90.73 million in short interest of the 261.30 millions share float, or 38.9% of the float.
That means 61.1% of the float are long shares.
I've never seen a stock price behave like MannKind's stock has over the past year and I have a few simple questions that perhaps somebody would be kind enough to answer in a way that makes sense:
So why aren't there "bull runs"? Don't funds stand to make $millions if the share price rallies?
Can somebody explain how bears, who are essentially outnumbered 2 to 1, can wield so much influence and so much power that they can manage to keep share price from taking off?
I'm not being a Debbie Downer on MannKind. Frankly, I'm not really discouraged at all by the long-term prospects of my MNKD investment. Judging from the daily price action and low volume, I can see that there is some fighting going on in trading this battlefield stock, but I'm wondering why long funds aren't winning since they outnumber shorts.
Perhaps I don't fully understand the nature of "short interest"? |
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Post by babaoriley on Mar 16, 2015 13:09:23 GMT -5
I look at it this way, mnholdem, what the stock does on any specific day depends on who is trading that stock that day. The fact that institutions hold a bunch of shares is great, but if they are not buying or selling on the day in question, it's almost as if they are not there. Same thing goes for the big time short interest holders, unless they are trading on a particular day, then they don't have much of a say in the price action for that day.
Stocks have bull runs all the time, and many of them are caused by "bull raids." We've had several, unfortunately, our bull runs/raids are very, very shortlived! Netflix is a good example of lots of bull raids and is suffering a bear raid today fueled by some negative analyst comments.
If all of a sudden, lots of people with lots of money decided MNKD stock was where it's at, then we'd see some great upward surge. They would overwhelm sellers on such a day. Conversely, if some bears get together and decide to be sellers, they overwhelm those purchasing on that day, and the stock drops. In both events, the movement of the stock causes others to do likewise, sell or buy, and the effect is exacerbated. Generally what happens is that if the stock moves too much to either side, the effect will self correct, as some perceive an opportunity, one way or the other.
With most stocks, the upside is far better on a day to day basis, because most stocks don't have this incredibly large and well-funded short position, which works to cap upside rallies. Of course, almost all stocks that rise too quickly will eventually come down to earth, but with MNKD, it happens faster, kinda like rapid acting Afrezza. Unlike Afrezza, however, the effect lingers.
Another reason the short side is helped out, is that retail longs are emotional sorts, and generally have placed every last investment dime into their beloved stock, and have also found dimes from other sources to add to their "sure thing." So, when the stock drops, they tend to get nervous and they might sell some, or, they are forced to sell some by Mr. Margin. Those very well heeled longs, may be able to add at the supposedly "bargain" prices, but far more are not in that position, as they are already 150% committed. The particular breed of short that has clung to MNKD for so long, is, I believe well funded and well organized. Most don't cover when the stock heads up, they simply sit chilly. Then, if it gets high enough ($7.50), it's time to short some more. Naturally some shorts do cover or are forced to cover, but for as long as I've been on this board, the demise of the shorts has been greatly exaggerated!
My guess is we're going to see a decent drop in the short interest for the period ending March 15 (back down to around 87,000,000 from close to 91,000,000). My reasoning there is many shorted the week before the Goldman Sachs downgrade and they then covered with a very good profit.
Right now, the price is a bit low to entice many shorts, or at least I sure hope so.
The Rx numbers we're seeing now, still meaningless, are not at all anything that can scare our breed of short. More likely to scare our breed of long! Rx numbers that almost all can agree are good numbers will be the real turning point, as then more and more shorts will exit and infect another stock.
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Post by dubylvs on Mar 16, 2015 13:15:41 GMT -5
I often have thought about what you just asked. Shorts always remind me of the the guy that bets against the person rolling the dice in a craps game. No one likes them as they emit bad karma at the game, but you find one at just about every table. I'm sure there are day traders out there that can answer your question.
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Post by rch51 on Mar 16, 2015 19:37:41 GMT -5
An excellent answer. One of the best and most rational explanations I've read on this or any other board.
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Post by joeypotsandpans on Mar 16, 2015 20:46:14 GMT -5
An excellent answer. One of the best and most rational explanations I've read on this or any other board. rch, did your pcp ever get you on Afrezza or did you go the way of Metformin...or are you continuing to manage it from change in lifestyle? Just curious from a fellow T2 standpoint. also, from your post below, do you still hold the same position and if so have you lent any out for the high interest paid for borrowed shares? Do you still question managements way of communicating or if they have the right team? Just curious from a fellow investors standpoint. From thread titled: I'm starting to HATE mankind! Because of Mannkind! Jul 25, 2014 at 8:51am "Yep, I gotta agree. I'm as long and strong as anyone on the board. But I have to admit, the company seriously sucks at PR. There are ways to communicate strength and confidence without saying anything that might endanger a pending deal. To stand back and continually let their shareholders bend over for the HF and MM is an ill advised management decision. I've been loading up for 4 plus years, 53,000 shares through disappointment after disappointment. And even with that I have no plans to sell, not even one share. But at this point, I'm beginning to question whether the company has the right team at the helm, and I'm not talking about Dr. Mann. Please guys, find a way to instill some faith and confidence so that we can remain LONG AND STRONG!" Moving on... As for the question mn posed about the ever elusive bull raid, I agree with most of what Baba said...but will add the difference is one side has had to borrow to reach their intentions the other only chooses to borrow through margin to add to a portfolio. So in essence, the entire short side is technically "on borrowed time" but unfortunately they can skew that clock and prevent some of the bull raids by absorbing the buying pressure until they can't absorb any longer...for those that know me I've said its analogous to chasing a losing bet (they were thinking the same about the long side until their (the shorts) arguments have been greatly diminished)...thus Baba's statement until now the ever elusive "demise of the shorts has been greatly exaggerated". It's obvious to the longs that the last wave of articles accompanied by the now lonesome downgrade were the most shallow to date...I liken their efforts now to psychological warfare on the longs as a last resort BUT with the recent 5 star HOLY GRAIL reviews (HOLY GRAIL as mentioned by none other than NOVO's Scientific Director of Diabetes Biology, Erica Nishimura www.novonordiskyoutube.com/Tag/index/73) it is evident to most current longs that those "borrowed" days are numbered and I believe sooner than later...does that mean we've seen the last of the bear raids, most probably not...but the bull raids will equal if not excel the previous bear raids both in size and duration when the skewed clock gets fixed. For those that never watched this youtube with Erica talking about what would be the holy grail of diabetic therapy it is worth listening to and while listening you can't help but wonder what her thoughts are about Afrezza and if she has seen some of the comments from the early adopters of it. BTW, the Buffalo Bulls made the big dance for the first time ever...just a little march madness trivia  |
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Post by chicagpete on Mar 16, 2015 20:46:49 GMT -5
My guess is we're going to see a decent drop in the short interest for the period ending March 15 (back down to around 87,000,000 from close to 91,000,000). My reasoning there is many shorted the week before the Goldman Sachs downgrade and they then covered with a very good profit. Right now, the price is a bit low to entice many shorts, or at least I sure hope so. baba. Thanks for your insights. I appreciate it and agree. However - One thing I don't get - it seems - per your guesstimates above - that there are still 87,000,000 short that are still quite enticed by this "low price"..........? |
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Post by dreamboatcruise on Mar 16, 2015 20:55:57 GMT -5
We always hear about the "bear raids". The Goldman-Sachs downgrade immediately followed by selling to drive down share prices. We also know that, as of the last NASDAQ report, MannKind has 90.73 million in short interest of the 261.30 millions share float, or 38.9% of the float.
That means 61.1% of the float are long shares.
I've never seen a stock price behave like MannKind's stock has over the past year and I have a few simple questions that perhaps somebody would be kind enough to answer in a way that makes sense:
So why aren't there "bull runs"? Don't funds stand to make $millions if the share price rallies?
Can somebody explain how bears, who are essentially outnumbered 2 to 1, can wield so much influence and so much power that they can manage to keep share price from taking off?
I'm not being a Debbie Downer on MannKind. Frankly, I'm not really discouraged at all by the long-term prospects of my MNKD investment. Judging from the daily price action and low volume, I can see that there is some fighting going on in trading this battlefield stock, but I'm wondering why long funds aren't winning since they outnumber shorts.
Perhaps I don't fully understand the nature of "short interest"? There are people far more knowledgeable about the market than I, but I think it may have something to do with short term or momentum trading vs larger investors. Institutional investors that have huge positions may have a harder time benefiting from a "run". They could throw a lot of money at the stock and shoot the price up, but if their position is large relative to normal trading volume then they would have a hard time selling to capture the profits without as quickly cratering the stock price. The shorts may use tricks or timing to push around the price with volumes small enough that getting out with a profit is easier. Seems like our longs are dedicated retail investors and big institutions and not a lot of medium sized tactical traders. Once real success starts rolling in, some of the shorts may turn to tactical longs. |
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Post by gomnkd on Mar 16, 2015 20:57:54 GMT -5
I don't know why people keep complaining about MNKD not issuing PR. Sanofi is the marketing partner. Even if Afrezza reaches a billion in sales, it is hardly 2% of Sanofi's total annual revenue. Afrezza for all intents and purposes is small potatoes for Sanofi.
As per agreement, Sanofi is not under obligation to keep MNKD shareholders happy. Al Mann was constantly showing the glimpse of promised land to keep longs in good spirits with statements like "I make 100x my money", "Greatest product ever", ....It did help raising some $ bit easy. Now the guy who usually talks can't talk and the one who could aint talkin.
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Post by mnholdem on Mar 17, 2015 16:30:22 GMT -5
Thanks for the thoughtful responses to my question. I simply cannot get past the fact that with, such a shortage of available shares, institutions and long funds don't force a rally - or the oft-discussed short squeeze. Are they in the perfect position to do it? I'm not sure and find myself wondering if the majority of fund managers who are shorting MNKD just happen to be near-equally hedged with long positions and could defuse any squeeze by returning borrowed shares they already own, rather than being forced to buy after the price seriously rallies.
It just seems to me that, at this point, any reasonable person would recognize that there is so much more money to be gained by going long. If we drop to $3 from today's $5.50 it yields a whopping $2.50 - big whoop-de-doo! It hardly seems worth the effort when you consider the interest that has to be paid.
Why not cover now, and get this train rolling? Do the MM's want options to expire worthless so that the shares don't get called away and assigned at these great prices? That's possible that they want these few million shares, I suppose, but short-term open interest drops off pretty good after Friday...until May.
Maybe we'll see things start to move after the March 20 options expire this Friday.
And I now realize how valuable your advice is about short-term options. Unless you're absolutely positive a big rally is imminent - and how can you be sure of anything with MNKD (chuckle) - the 2017 options make the most sense.
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Post by babaoriley on Mar 17, 2015 20:07:07 GMT -5
holdem, if a person is pretty sure that a stock will drop from $5.50 to $3.00, and leveraged his play, it would be quite a big whoop, if that result obtained. There are undoubtedly some folk out there that think that's very possible. I am certainly not one of them, and think they are very wrong.
Big time long players (like you and I, LOL) have to respect the shorts, due to their demonstrated tenacity (but not their fugacity), and I think if longs ever wanted to run this stock up, they figure they'd be met with some big money on the other end running it back down. As we recover and increase in price, more shorting will occur, unless something fundamental changes in our favor. Lots of Rx's would be the preferred route to drive a few to cover. So, we wait.
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Post by mnholdem on Mar 17, 2015 21:27:47 GMT -5
Yeah, I can be patient...hell, I've owned my PLM mining stock for 10 years of fighting with the EPA, about the same amount of time you the MNKD IPO investors have fought the FDA. People here are discussing whether Afrezza will hit $1 billion. My startup company is a few months away from permitting and sits on a $3 trillion (yes with a "t") ore body in northern Minnesota, the largest undeveloped ore body in the world. Which happens to sit smack dab in the middle of some of the most pristine wilderness in America. Like Afrezza, my decision to invest in Polymet comes down to the science of mining cleanly.
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PLM has environmentalists for enemies rather than hedge fund managers.
I remember a few years ago reading a piece, an interview I think, where Mr. Mann got quite angry while discussing the negative impact that short interests are having on innovative companies throughout America. It made me think right then and there that he's planning some kind of payback. To be honest, I don't care if shorts take their money and run. I just wish they'd go away.
Of course, sales WILL eventually drive shorts away. I can wait it out... and will continue to buy shares of both companies.
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In the meantime, I'll blow off some steam every now and then (chuckle).
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Post by dreamboatcruise on Mar 17, 2015 21:43:59 GMT -5
I'm not sure I know exactly why we get no bull raid, but this is what I imagine it would look like. Attachment Deleted |
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Post by mnholdem on Mar 17, 2015 21:47:10 GMT -5
Now THAT is too funny. I don't think Fraudstein looks like he's too concerned. Probably has another biotech he's ready to move on to. Great post!
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Post by savzak on Mar 17, 2015 22:07:17 GMT -5
I'm not sure I know exactly why we get no bull raid, but this is what I imagine it would look like. View AttachmentTop flight DBC. Kudos. |
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Post by 4allthemarbles on Mar 18, 2015 0:08:27 GMT -5
DBC- excellent.
For the record, if you are taking up a fund to make this happen, I have a donation I'd like to make.
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