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Post by agedhippie on Jun 12, 2017 21:38:19 GMT -5
That's a tricky question to answer. You can only drive down the price by shorting on a weak stock because otherwise the buyers will snap up anything you want to sell. The market always has deeper resources than you do as Bill Ackman found with Herbalife. I think the answer to your question is that the number of shorts is not hugely significant. It's all about selling pressure and downward pressure can come from longs taking profits, shorts selling short, lack of buyers to pick up routine sales,... If the AMF is loaning out their shares (and I would have to think they would be) then between the the AMF and the institutions there should be enough shares out there to cover the short position before you get to the retail segment. Executive summary - I don't see a short squeeze as the lenders are almost entirely long term holders. You lost me when you said you don't see a short squeeze because the lenders are mostly long term holders. I thought short squeezes are caused by shorts not being able to cover because of insufficient selling volume and strong buying volume. How do the lenders of the short shares figure into the equation? Wait, I think I see now what you are saying: you believe there would be insufficient buying volume to cause a short squeeze because most of the shares outstanding are owned by the Mann Foundation and institutions? (edit: in other words you don't believe there are enough shares in the float to create sufficient buying volume to create a short squeeze?) It's stock holders asking for their shares back that creates a squeeze because the borrower now needs to find those shares from somewhere. Typically this happens when the price spikes and people want to sell which produces a vicious circle as the need to cover pushes the price higher inducing more people to sell... Long term holders are not selling - either because they cannot in the case of the tracker funds, or because they are in for the long haul aiming at a multi-bagger rather than a quick profit. This means they are not going to recall their shares, especially if the interest rate goes high, and therefore their shares remain available which reduces the impact of the short squeeze. With Mannkind the number of shares held by trackers and the AMF which are going to remain available is substantial. That was a long winded way of agreeing with you. |
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Post by brotherm1 on Jun 12, 2017 22:19:26 GMT -5
You lost me when you said you don't see a short squeeze because the lenders are mostly long term holders. I thought short squeezes are caused by shorts not being able to cover because of insufficient selling volume and strong buying volume. How do the lenders of the short shares figure into the equation? Wait, I think I see now what you are saying: you believe there would be insufficient buying volume to cause a short squeeze because most of the shares outstanding are owned by the Mann Foundation and institutions? (edit: in other words you don't believe there are enough shares in the float to create sufficient buying volume to create a short squeeze?) It's stock holders asking for their shares back that creates a squeeze because the borrower now needs to find those shares from somewhere. Typically this happens when the price spikes and people want to sell which produces a vicious circle as the need to cover pushes the price higher inducing more people to sell... Long term holders are not selling - either because they cannot in the case of the tracker funds, or because they are in for the long haul aiming at a multi-bagger rather than a quick profit. This means they are not going to recall their shares, especially if the interest rate goes high, and therefore their shares remain available which reduces the impact of the short squeeze. With Mannkind the number of shares held by trackers and the AMF which are going to remain available is substantial. That was a long winded way of agreeing with you. Good stuff. If the AMF has their shares lent out, would it not benefit them at this point to recall them to boost the share price - particularly at around this time - if MNKD would be seeking to obtain operating funds through an equity offering? |
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Post by agedhippie on Jun 13, 2017 9:14:34 GMT -5
It's stock holders asking for their shares back that creates a squeeze because the borrower now needs to find those shares from somewhere. Typically this happens when the price spikes and people want to sell which produces a vicious circle as the need to cover pushes the price higher inducing more people to sell... Long term holders are not selling - either because they cannot in the case of the tracker funds, or because they are in for the long haul aiming at a multi-bagger rather than a quick profit. This means they are not going to recall their shares, especially if the interest rate goes high, and therefore their shares remain available which reduces the impact of the short squeeze. With Mannkind the number of shares held by trackers and the AMF which are going to remain available is substantial. That was a long winded way of agreeing with you. Good stuff. If the AMF has their shares lent out, would it not benefit them at this point to recall them to boost the share price - particularly at around this time - if MNKD would be seeking to obtain operating funds through an equity offering? Looking at the numbers now (which is what I should have done in the first place) I am not sure it would make a difference. I am also not sure that the AMF is loaning out their stock. The short volume is around 25 million and of that the tracker funds alone can cover 19 million which leaves a short fall of 6 million. The institutional sector is around 18 million so they could be coveingr the balance without involving the AMF. The institutional investors are not as predictable as the trackers so there is a certain amount of risk there for shorts but probably not a lot. |
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Post by harryx1 on Jun 14, 2017 9:13:26 GMT -5
Per a few people on ST - Schwab is offering 80% to borrow shares
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