Post by ashiwi on Jun 8, 2014 7:56:28 GMT -5
www.notwallstreet.com/mannkind-mailbag-commentary-6614/
new blog from Nate's notes
MannKind Mailbag (and other commentary) 6/6/14
As most of you know, it has been a very exciting last couple of weeks for MannKind (MNKD – $10.26) shareholders!
Naturally, the run-up in the stock has attracted a lot of attention, especially from short-sellers… and this, in turn, has meant a lot of email for me from subscribers!
Consequently, since I am overdue for putting a new blog entry up on the website anyway (and with the recognition that I may end up needing to eat some humble pie down the road if it turns out I am the one who has it all wrong), I thought I’d share a few of the paraphrased emails (along with my replies) and some additional commentary in hopes that others will find the following material useful as well as we head into the weekend.
As most of you know, it has been a very exciting last couple of weeks for MannKind (MNKD – $10.26) shareholders!
Naturally, the run-up in the stock has attracted a lot of attention, especially from short-sellers… and this, in turn, has meant a lot of email for me from subscribers!
Consequently, since I am overdue for putting a new blog entry up on the website anyway (and with the recognition that I may end up needing to eat some humble pie down the road if it turns out I am the one who has it all wrong), I thought I’d share a few of the paraphrased emails (along with my replies) and some additional commentary in hopes that others will find the following material useful as well as we head into the weekend.
FROM AN EMAIL
Thanks for the great call on MNKD as I think it has already paid for my Nate’s Notes subscription for the rest of my life.
I do have a question for you as I am unsure of the answer.
You always talk of a “short squeeze,” and I understand the concept; however, as I Google the short interest on MNKD, I don’t have a basis for comparison as to whether it is now higher, lower or about the same.
My thinking would be that with the great run-up MNKD has had, the short interest would have declined (because I would be getting out and cutting my losses), however I am not sure if that is the case.
Therefore, the question would be, how do I monitor the short interest to determine if the short interest is declining, staying the same or increasing – which then would also point to the direction of where MNKD stock may be headed.
I know I can wait for an alert from you, but I would like to learn as well. Thanks so much.
MY REPLY
Unfortunately, short interest numbers are only released every two weeks (which is better than the once a month it used to be in the old days), so it is difficult to know what short interest looks like in real-time.
That being said, the best place to look is on the Nasdaq’s website:
www.nasdaq.com/quotes/short-interest.aspx
And, with regards to when/why shorts decide to cover, you are correct that some of them may be covering their shorts (either by choice or due to margin calls) as the stock has risen… but keep in mind that, just like investors on the long side who get stuck in the trap of “averaging down” day after day when a stock they love starts to slide, some of these shorts are absolutely convinced that Afrezza is going to be a flop, and thus they are probably aggressively “averaging up” as the stock continues to rise, licking their chops in anticipation of even bigger gains if/when the stock drops to $1.
Of course, this “averaging up” is a dangerous game to play, as shorting stocks holds unlimited risk, whereas the most you can lose when you start throwing good money after bad on the long side is the capital you actually used to enter the positions…
I, too, am anxiously looking forward to the next short interest update (due out any day now)… but given some of the nonsense still making the rounds on the internet (Adam Feuerstein’s blog, articles on Seeking Alpha, etc.), I am guessing that there are still plenty of people betting on the short side of things.
And, speaking of Adam Feuerstein’s blog…
FROM AN EMAIL
www.thestreet.com/story/12733760/1/the-expected-rise-and-inevitable-fall-of-mannkind.html
comments?
MY REPLY
Heh – same old Adam… I found it quite disingenuous for him to call it an “expected” rise of MannKind when he has spent the last 24 months predicting it would fall, but I suppose he can write what he wants and let the public reach their own conclusions.
For awhile, I have to admit that I was worried that Adam might’ve been on to something (albeit with an opposite interpretation from what I had)… until he expressed surprise that MannKind was “going to play up the lower number of hypos” in front of the FDA panel while he was live blogging the event.
At that point, I realized he really hadn’t been paying attention after all with regards to what Afrezza is all about (even though he writes as if he understands the story) and I could breathe a little more easily.
As always, I think it is important to read all you can about a situation to make sure you’re considering all points of view… however, while there is a very good chance the stock will pull back a bit post-approval (and Adam will probably write a self-congratulating piece when it does), I think he is doing a huge disservice to individual investors by first keeping them out of the stock at lower prices, and now encouraging them to play for a short trade on the downside rather than simply investing in the company for the long-term.
He creates a lot of extra work for me, but at the end of the day, it ultimately creates opportunity for me and my subscribers… so we put up with him
I hope that helps a bit!
Here is a link to a nice article that appeared on Seeking Alpha last night debunking some of the myths the short sellers are still grasping at as the stock works its way higher…
seekingalpha.com/instablog/961133-think-long-term/2968923-mannkind-shares-keep-rising-as-short-seller-myths-continue-to-be-discredited
And, finally, here is an excerpt of the brief update I provided for subscribers of The Wagmore Advisory Letter this morning…
[when it comes to] MannKind (MNKD – $10.32), I don’t know what else to tell you other than the buying pressure on the stock is currently several times larger than the selling pressure… and while it is difficult to say what “fair value” might be for the stock, the trend is currently in our favor (and thus our job is sit tight for as long as we can).
Add to this the fact that there are still close 70 million shares short (as of the last filing period), and this, too [along with our semiconductor positions, Cirrus Logic (CRUS – $23.48) and NVIDIA (NVDA – $19.01)], starts to look like a situation where we want to be patient about limiting our upside potential [by writing covered calls] now that things are headed the right direction.
Despite the overwhelmingly positive AdCom vote a few months ago, there are never any guarantees with the FDA (and thus, unfortunately, despite how good you might be feeling about the stock right now, you need to remember that there is still a chance the agency will surprise us with a negative ruling sometime between now and July 15th), but based on comments made by management over the past several weeks, I continue to believe that the odds of a negative outcome are diminishing.
In addition, though management has been rather tight-lipped about partnership discussions, I continue to believe the odds are growing that Al Mann has, in fact, lined up a deal (or perhaps deals) that he is pleased with.
As discussed a number of times before, if the company were being run by some young, brash CEO hoping to score his first major deal (and bluffing about it while scrambling behind the scenes to get something done), I might feel differently… but given Al Mann’s experience and track record, I am comfortable with the idea of letting him “slow roll” the announcement of the deal if he so chooses (and it may be contingent on final approval and labeling of Afrezza anyway).
That being said, you are encouraged to continue holding as much of your position as you are comfortable sleeping with at night (or get a small one started at current prices) while we wait for the next card to be turned over.
Stay tuned!
new blog from Nate's notes
MannKind Mailbag (and other commentary) 6/6/14
As most of you know, it has been a very exciting last couple of weeks for MannKind (MNKD – $10.26) shareholders!
Naturally, the run-up in the stock has attracted a lot of attention, especially from short-sellers… and this, in turn, has meant a lot of email for me from subscribers!
Consequently, since I am overdue for putting a new blog entry up on the website anyway (and with the recognition that I may end up needing to eat some humble pie down the road if it turns out I am the one who has it all wrong), I thought I’d share a few of the paraphrased emails (along with my replies) and some additional commentary in hopes that others will find the following material useful as well as we head into the weekend.
As most of you know, it has been a very exciting last couple of weeks for MannKind (MNKD – $10.26) shareholders!
Naturally, the run-up in the stock has attracted a lot of attention, especially from short-sellers… and this, in turn, has meant a lot of email for me from subscribers!
Consequently, since I am overdue for putting a new blog entry up on the website anyway (and with the recognition that I may end up needing to eat some humble pie down the road if it turns out I am the one who has it all wrong), I thought I’d share a few of the paraphrased emails (along with my replies) and some additional commentary in hopes that others will find the following material useful as well as we head into the weekend.
FROM AN EMAIL
Thanks for the great call on MNKD as I think it has already paid for my Nate’s Notes subscription for the rest of my life.
I do have a question for you as I am unsure of the answer.
You always talk of a “short squeeze,” and I understand the concept; however, as I Google the short interest on MNKD, I don’t have a basis for comparison as to whether it is now higher, lower or about the same.
My thinking would be that with the great run-up MNKD has had, the short interest would have declined (because I would be getting out and cutting my losses), however I am not sure if that is the case.
Therefore, the question would be, how do I monitor the short interest to determine if the short interest is declining, staying the same or increasing – which then would also point to the direction of where MNKD stock may be headed.
I know I can wait for an alert from you, but I would like to learn as well. Thanks so much.
MY REPLY
Unfortunately, short interest numbers are only released every two weeks (which is better than the once a month it used to be in the old days), so it is difficult to know what short interest looks like in real-time.
That being said, the best place to look is on the Nasdaq’s website:
www.nasdaq.com/quotes/short-interest.aspx
And, with regards to when/why shorts decide to cover, you are correct that some of them may be covering their shorts (either by choice or due to margin calls) as the stock has risen… but keep in mind that, just like investors on the long side who get stuck in the trap of “averaging down” day after day when a stock they love starts to slide, some of these shorts are absolutely convinced that Afrezza is going to be a flop, and thus they are probably aggressively “averaging up” as the stock continues to rise, licking their chops in anticipation of even bigger gains if/when the stock drops to $1.
Of course, this “averaging up” is a dangerous game to play, as shorting stocks holds unlimited risk, whereas the most you can lose when you start throwing good money after bad on the long side is the capital you actually used to enter the positions…
I, too, am anxiously looking forward to the next short interest update (due out any day now)… but given some of the nonsense still making the rounds on the internet (Adam Feuerstein’s blog, articles on Seeking Alpha, etc.), I am guessing that there are still plenty of people betting on the short side of things.
And, speaking of Adam Feuerstein’s blog…
FROM AN EMAIL
www.thestreet.com/story/12733760/1/the-expected-rise-and-inevitable-fall-of-mannkind.html
comments?
MY REPLY
Heh – same old Adam… I found it quite disingenuous for him to call it an “expected” rise of MannKind when he has spent the last 24 months predicting it would fall, but I suppose he can write what he wants and let the public reach their own conclusions.
For awhile, I have to admit that I was worried that Adam might’ve been on to something (albeit with an opposite interpretation from what I had)… until he expressed surprise that MannKind was “going to play up the lower number of hypos” in front of the FDA panel while he was live blogging the event.
At that point, I realized he really hadn’t been paying attention after all with regards to what Afrezza is all about (even though he writes as if he understands the story) and I could breathe a little more easily.
As always, I think it is important to read all you can about a situation to make sure you’re considering all points of view… however, while there is a very good chance the stock will pull back a bit post-approval (and Adam will probably write a self-congratulating piece when it does), I think he is doing a huge disservice to individual investors by first keeping them out of the stock at lower prices, and now encouraging them to play for a short trade on the downside rather than simply investing in the company for the long-term.
He creates a lot of extra work for me, but at the end of the day, it ultimately creates opportunity for me and my subscribers… so we put up with him
I hope that helps a bit!
Here is a link to a nice article that appeared on Seeking Alpha last night debunking some of the myths the short sellers are still grasping at as the stock works its way higher…
seekingalpha.com/instablog/961133-think-long-term/2968923-mannkind-shares-keep-rising-as-short-seller-myths-continue-to-be-discredited
And, finally, here is an excerpt of the brief update I provided for subscribers of The Wagmore Advisory Letter this morning…
[when it comes to] MannKind (MNKD – $10.32), I don’t know what else to tell you other than the buying pressure on the stock is currently several times larger than the selling pressure… and while it is difficult to say what “fair value” might be for the stock, the trend is currently in our favor (and thus our job is sit tight for as long as we can).
Add to this the fact that there are still close 70 million shares short (as of the last filing period), and this, too [along with our semiconductor positions, Cirrus Logic (CRUS – $23.48) and NVIDIA (NVDA – $19.01)], starts to look like a situation where we want to be patient about limiting our upside potential [by writing covered calls] now that things are headed the right direction.
Despite the overwhelmingly positive AdCom vote a few months ago, there are never any guarantees with the FDA (and thus, unfortunately, despite how good you might be feeling about the stock right now, you need to remember that there is still a chance the agency will surprise us with a negative ruling sometime between now and July 15th), but based on comments made by management over the past several weeks, I continue to believe that the odds of a negative outcome are diminishing.
In addition, though management has been rather tight-lipped about partnership discussions, I continue to believe the odds are growing that Al Mann has, in fact, lined up a deal (or perhaps deals) that he is pleased with.
As discussed a number of times before, if the company were being run by some young, brash CEO hoping to score his first major deal (and bluffing about it while scrambling behind the scenes to get something done), I might feel differently… but given Al Mann’s experience and track record, I am comfortable with the idea of letting him “slow roll” the announcement of the deal if he so chooses (and it may be contingent on final approval and labeling of Afrezza anyway).
That being said, you are encouraged to continue holding as much of your position as you are comfortable sleeping with at night (or get a small one started at current prices) while we wait for the next card to be turned over.
Stay tuned!
