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Post by straightly on Apr 7, 2018 13:13:36 GMT -5
Wonder if it is possible that the private placements shares where shorted before the deal is announced.
Do we know? Can we know?
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Post by agedhippie on Apr 7, 2018 13:34:05 GMT -5
Wonder if it is possible that the private placements shares where shorted before the deal is announced. Do we know? Can we know? Yes it is both possible and normal. There is an arbitrage between the placement price and the the actual price which is the reward for the buyer of the placement providing liquidity. The stock is shorted ahead of the placement to lock in that arbitrage. Do we known, or can we know? No. There is no requirement to post that information. |
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Post by sellhighdrinklow on Apr 7, 2018 13:41:00 GMT -5
Wonder if it is possible that the private placements shares where shorted before the deal is announced. Do we know? Can we know? Yes it is both possible and normal. There is an arbitrage between the placement price and the the actual price which is the reward for the buyer of the placement providing liquidity. The stock is shorted ahead of the placement to lock in that arbitrage. Do we known, or can we know? No. There is no requirement to post that information. 99.99%. The other .01% was a mathmatical oversight of how many to short. |
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Post by mnkdfann on Apr 7, 2018 13:56:27 GMT -5
Wonder if it is possible that the private placements shares where shorted before the deal is announced. Do we know? Can we know? Whether they were or not, there is another consideration. Almost certainly H.C. Wainwright shopped this placement around in order to find buyers. Hence, numerous parties probably knew an offering was on the way and they knew shorting shares in advance of the offering would be advantageous (whether they participated in the offering or not). It is not hard to believe that some of these parties may have shorted in advance on this knowledge, even though doing so would be illegal. There is evidence that this sort of thing occurs routinely in the market. E.g. papers.ssrn.com/sol3/papers.cfm?abstract_id=2233757"This paper examines privately placed common stock and convertible offerings in the U.S. over the period 2007 – 2011. Using proprietary short interest data, we document significant increases in short interest in the pre-announcement period, which suggests illegal pre-announcement speculation or illegal pre-announcement risk management. Further analysis suggests that it is the former of these two explanations which is more likely." |
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Post by straightly on Apr 7, 2018 15:19:31 GMT -5
Wonder if it is possible that the private placements shares where shorted before the deal is announced. Do we know? Can we know? Whether they were or not, there is another consideration. Almost certainly H.C. Wainwright shopped this placement around in order to find buyers. Hence, numerous parties probably knew an offering was on the way and they knew shorting shares in advance of the offering would be advantageous (whether they participated in the offering or not). It is not hard to believe that some of these parties may have shorted in advance on this knowledge, even though doing so would be illegal. There is evidence that this sort of thing occurs routinely in the market. E.g. papers.ssrn.com/sol3/papers.cfm?abstract_id=2233757"This paper examines privately placed common stock and convertible offerings in the U.S. over the period 2007 – 2011. Using proprietary short interest data, we document significant increases in short interest in the pre-announcement period, which suggests illegal pre-announcement speculation or illegal pre-announcement risk management. Further analysis suggests that it is the former of these two explanations which is more likely." If that were the case, then why Mike does this instead of use the ATM and ask the shareholders for more capability of the ATM? In this case, even if, after $28m from ATM, the share price would be depressed to $1.79, at least we will not have the warranty over hang, these who bought will not have been cheated, and it is even possible that MNKD got an average price of higher than $2, starting from $2.5. On the other hand, if the placement was not shorted beforehand, at least NOT by the direct investors, then we actually end up with $28m new money willing to bet on MNKD worth more than $2 a share! That would be nice. |
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Post by matt on Apr 7, 2018 15:31:52 GMT -5
It is likely that this happened, and it is likely that those not involved in the transaction did so as well. In PIPE transactions, those who are solicited but elect not to participate in the offering are, in theory, banned from short selling. There are a few funds that have been caught doing this and the SEC smacked them pretty hard.
Funds that did participate in the offering are legally allowed to short the stock once they have signed the subscription agreement. Previously, the SEC had ruled that this was illegal until the transaction had been made public but the court felt otherwise and the SEC lost. So long as the subscriber has created a bona fide financial obligation to be long MNKD stock then they are allowed to hedge that economic risk by going short or establishing option positions.
However, you didn't need to be a genius to see this coming. On March 14 the company issued a press release titled "MannKind Corporation to Present at Oppenheimer 28th Annual Healthcare Conference" and another on March 19 titled "MannKind Announces Participation at the H.C. Wainwright Annual Global Life Sciences Conference". That is about as subtle as erecting a red neon sign on the corporate headquarters announcing that a PIPE raise was imminent. The funds that attend these conferences, and especially those that go to the HC Wainwright conference, are not there to look for novel investment ideas; they are there to place money and the companies chosen to present are those that have a near term need for money. HC Wainwright is not a charity, they are an investment bank looking to make some bucks on the placement fees which is why they throw the conference!
Don't believe me? Go back and look at the historical data, especially the thread on the broker loan rate around that time, and the news.
On March 16, right after the first press release, Zacks had a release tilted "Options Traders Expect Huge Moves in MannKind (MNKD) Stock"
In the thread on loan rates, boca1girl posted this from another site:
Largest borrow rate increases among liquid names (TheFlyOnTheWall)
— 8:45 AM ET 03/19/2018
Latest data shows the largest indicative borrow rate increases among liquid option names include: MannKind (MNKD) 53.12% +0.06
You get the idea; once the company started signaling that they were actively looking for PIPE money anybody who follows this stock knew, or should have known, that a big raise was coming and given the lack of highly positive catalysts in the first quarter, the raise would likely be at a deep discount. Zacks knew this, TheFlyOnTheWall knew this, and you can be sure that a lot of other people figured it out as well. That is also why the PPS dropped from $2.71 the day before the first announcement to $2.20 the day before the PIPE was announced. Sure, the broader market was down a bit as well but MNKD was down more than its beta would predict.
So it is almost certain that lots of people were short MNKD in the weeks leading up to the deal, and a lot of those covered and have locked in their profit. Given that, does it matter if the private placement shares themselves were shorted, or not, since all of Wall Street could see what was coming? The signs were there for those who choose to look for them.
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Post by matt on Apr 7, 2018 15:43:20 GMT -5
If that were the case, then why Mike does this instead of use the ATM and ask the shareholders for more capability of the ATM? The reason why an ATM or any other Rule 415 funding program is not feasible has to do with volume. If a company puts fresh shares into the market that represent more than about 10% of the total daily volume, that will impact the PPS negatively. That sets a practical limit on MNKD of about 200K shares per day, or at recent prices of $2.70, they can raise no more than about $540K in new cash per trading day. However, if the company does that every day then the PPS will start to take a hit and each placement will require more shares to yield the same dollar proceeds. In those cases it is better to take the pain on a single day. The other issue with the ATM as a funding vehicle is that the amount that can be raised (in dollar terms) is close to what the company spends per day exclusive of debt payments. That is a risky financial strategy because if anything goes wrong, company related or not, the ATM cannot deliver enough new cash going forward, and the cost of doing a substantial PIPE raise in those conditions would be punitive. |
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Post by boytroy88 on Apr 7, 2018 16:39:35 GMT -5
It is likely that this happened, and it is likely that those not involved in the transaction did so as well. In PIPE transactions, those who are solicited but elect not to participate in the offering are, in theory, banned from short selling. There are a few funds that have been caught doing this and the SEC smacked them pretty hard. Funds that did participate in the offering are legally allowed to short the stock once they have signed the subscription agreement. Previously, the SEC had ruled that this was illegal until the transaction had been made public but the court felt otherwise and the SEC lost. So long as the subscriber has created a bona fide financial obligation to be long MNKD stock then they are allowed to hedge that economic risk by going short or establishing option positions. However, you didn't need to be a genius to see this coming. On March 14 the company issued a press release titled " MannKind Corporation to Present at Oppenheimer 28th Annual Healthcare Conference" and another on March 19 titled " MannKind Announces Participation at the H.C. Wainwright Annual Global Life Sciences Conference". That is about as subtle as erecting a red neon sign on the corporate headquarters announcing that a PIPE raise was imminent. The funds that attend these conferences, and especially those that go to the HC Wainwright conference, are not there to look for novel investment ideas; they are there to place money and the companies chosen to present are those that have a near term need for money. HC Wainwright is not a charity, they are an investment bank looking to make some bucks on the placement fees which is why they throw the conference! Don't believe me? Go back and look at the historical data, especially the thread on the broker loan rate around that time, and the news. On March 16, right after the first press release, Zacks had a release tilted " Options Traders Expect Huge Moves in MannKind (MNKD) Stock" In the thread on loan rates, boca1girl posted this from another site: Largest borrow rate increases among liquid names (TheFlyOnTheWall) — 8:45 AM ET 03/19/2018
Latest data shows the largest indicative borrow rate increases among liquid option names include: MannKind (MNKD) 53.12% +0.06
You get the idea; once the company started signaling that they were actively looking for PIPE money anybody who follows this stock knew, or should have known, that a big raise was coming and given the lack of highly positive catalysts in the first quarter, the raise would likely be at a deep discount. Zacks knew this, TheFlyOnTheWall knew this, and you can be sure that a lot of other people figured it out as well. That is also why the PPS dropped from $2.71 the day before the first announcement to $2.20 the day before the PIPE was announced. Sure, the broader market was down a bit as well but MNKD was down more than its beta would predict. So it is almost certain that lots of people were short MNKD in the weeks leading up to the deal, and a lot of those covered and have locked in their profit. Given that, does it matter if the private placement shares themselves were shorted, or not, since all of Wall Street could see what was coming? The signs were there for those who choose to look for them. You must be super rich...with all the info that you possess you must frequent a lot of other boards too...be interesting to know what they are. |
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Post by brotherm1 on Apr 7, 2018 17:17:55 GMT -5
Well, at least on Tuesday in Monte Carlo, Mike can now say we have about $30 million cash, or perhaps if Deerfield relaxed their covenant or took shares as payment, he could say around $55M. Even the former sounds better than going to the Wainwright conference Tuesday and saying we have around $2M-$5M and need help ASAP
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Post by boca1girl on Apr 7, 2018 17:23:48 GMT -5
It is likely that this happened, and it is likely that those not involved in the transaction did so as well. In PIPE transactions, those who are solicited but elect not to participate in the offering are, in theory, banned from short selling. There are a few funds that have been caught doing this and the SEC smacked them pretty hard. Funds that did participate in the offering are legally allowed to short the stock once they have signed the subscription agreement. Previously, the SEC had ruled that this was illegal until the transaction had been made public but the court felt otherwise and the SEC lost. So long as the subscriber has created a bona fide financial obligation to be long MNKD stock then they are allowed to hedge that economic risk by going short or establishing option positions. However, you didn't need to be a genius to see this coming. On March 14 the company issued a press release titled " MannKind Corporation to Present at Oppenheimer 28th Annual Healthcare Conference" and another on March 19 titled " MannKind Announces Participation at the H.C. Wainwright Annual Global Life Sciences Conference". That is about as subtle as erecting a red neon sign on the corporate headquarters announcing that a PIPE raise was imminent. The funds that attend these conferences, and especially those that go to the HC Wainwright conference, are not there to look for novel investment ideas; they are there to place money and the companies chosen to present are those that have a near term need for money. HC Wainwright is not a charity, they are an investment bank looking to make some bucks on the placement fees which is why they throw the conference! Don't believe me? Go back and look at the historical data, especially the thread on the broker loan rate around that time, and the news. On March 16, right after the first press release, Zacks had a release tilted " Options Traders Expect Huge Moves in MannKind (MNKD) Stock" In the thread on loan rates, boca1girl posted this from another site: Largest borrow rate increases among liquid names (TheFlyOnTheWall) — 8:45 AM ET 03/19/2018
Latest data shows the largest indicative borrow rate increases among liquid option names include: MannKind (MNKD) 53.12% +0.06
You get the idea; once the company started signaling that they were actively looking for PIPE money anybody who follows this stock knew, or should have known, that a big raise was coming and given the lack of highly positive catalysts in the first quarter, the raise would likely be at a deep discount. Zacks knew this, TheFlyOnTheWall knew this, and you can be sure that a lot of other people figured it out as well. That is also why the PPS dropped from $2.71 the day before the first announcement to $2.20 the day before the PIPE was announced. Sure, the broader market was down a bit as well but MNKD was down more than its beta would predict. So it is almost certain that lots of people were short MNKD in the weeks leading up to the deal, and a lot of those covered and have locked in their profit. Given that, does it matter if the private placement shares themselves were shorted, or not, since all of Wall Street could see what was coming? The signs were there for those who choose to look for them. Thanks for the education Matt. I was ignorant to all this. I hope I can recognize the warning signs next time. What a costly lesson this investment has been the last four years. I started out thinking Mannkind was a no-brainer with it’s superior insulin and drug delivery technology. I still have high hopes Afrezza/Mannkind and all of the shareholders will ultimately be successful. |
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Post by straightly on Apr 7, 2018 17:28:35 GMT -5
It is likely that this happened, and it is likely that those not involved in the transaction did so as well. In PIPE transactions, those who are solicited but elect not to participate in the offering are, in theory, banned from short selling. There are a few funds that have been caught doing this and the SEC smacked them pretty hard. Funds that did participate in the offering are legally allowed to short the stock once they have signed the subscription agreement. Previously, the SEC had ruled that this was illegal until the transaction had been made public but the court felt otherwise and the SEC lost. So long as the subscriber has created a bona fide financial obligation to be long MNKD stock then they are allowed to hedge that economic risk by going short or establishing option positions. However, you didn't need to be a genius to see this coming. On March 14 the company issued a press release titled " MannKind Corporation to Present at Oppenheimer 28th Annual Healthcare Conference" and another on March 19 titled " MannKind Announces Participation at the H.C. Wainwright Annual Global Life Sciences Conference". That is about as subtle as erecting a red neon sign on the corporate headquarters announcing that a PIPE raise was imminent. The funds that attend these conferences, and especially those that go to the HC Wainwright conference, are not there to look for novel investment ideas; they are there to place money and the companies chosen to present are those that have a near term need for money. HC Wainwright is not a charity, they are an investment bank looking to make some bucks on the placement fees which is why they throw the conference! Don't believe me? Go back and look at the historical data, especially the thread on the broker loan rate around that time, and the news. On March 16, right after the first press release, Zacks had a release tilted " Options Traders Expect Huge Moves in MannKind (MNKD) Stock" In the thread on loan rates, boca1girl posted this from another site: Largest borrow rate increases among liquid names (TheFlyOnTheWall) — 8:45 AM ET 03/19/2018
Latest data shows the largest indicative borrow rate increases among liquid option names include: MannKind (MNKD) 53.12% +0.06
You get the idea; once the company started signaling that they were actively looking for PIPE money anybody who follows this stock knew, or should have known, that a big raise was coming and given the lack of highly positive catalysts in the first quarter, the raise would likely be at a deep discount. Zacks knew this, TheFlyOnTheWall knew this, and you can be sure that a lot of other people figured it out as well. That is also why the PPS dropped from $2.71 the day before the first announcement to $2.20 the day before the PIPE was announced. Sure, the broader market was down a bit as well but MNKD was down more than its beta would predict. So it is almost certain that lots of people were short MNKD in the weeks leading up to the deal, and a lot of those covered and have locked in their profit. Given that, does it matter if the private placement shares themselves were shorted, or not, since all of Wall Street could see what was coming? The signs were there for those who choose to look for them. WOW. How little did I know. I was hoping desperately for a silver lining that somebody with money AND in the know actually saw a reason to buy into MNKD. $28M is meaningful money and buying into MNKD, even at $2.00, is a commitment. So you are saying is that not only that there is no investment or commitment from any investors, but also that SEC actually lost case which made screwing retail investors this way legal. Do not understand, but there seemed to be no counter action of risk/reward here. |
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Post by agedhippie on Apr 7, 2018 19:15:57 GMT -5
WOW. How little did I know. I was hoping desperately for a silver lining that somebody with money AND in the know actually saw a reason to buy into MNKD. $28M is meaningful money and buying into MNKD, even at $2.00, is a commitment. So you are saying is that not only that there is no investment or commitment from any investors, but also that SEC actually lost case which made screwing retail investors this way legal. Do not understand, but there seemed to be no counter action of risk/reward here. Nobody of any consequence is going to buy Mannkind as an investment at this point. For that to happen sales need to be far higher than they are now. They will buy Mannkind as a trading position because of it's volatility, and dare I say, ease of manipulation (that's micro-caps for you). There is a risk involved in this and that is that the price moves unexpectedly and you cannot establish the short. The last thing a buyer want in these circumstances is to be stuck with the stock. If you look what is in it for each part of the chain... HCW get a percentage for finding and placing the deal. In order to achieve that though they need a pool of liquidity that can absorb the placement. The banks form the pool. HCW puts together a group that will provide the liquidity in exchange for a quick flip. The banks trust HCW not to put them into a deal that they cannot flip, and HCW delivers on that because if their deals go bad the banks will drop out taking their liquidity with them and HCW will not be able to place any more deals. There are banks who buy flipped shares in the aftermath of these events and sell once the share price recovers for a month or so when the price recovers. They are not going to buy unless they can see the price reverting, or they are sold the stock at a discount (usually via a dark pool). Someone has to be at the end of the food chain and that is the investor. They lend out the shares to short and get paid, and they are also expected to buy the flipped shares (either averaging down, or entering the stock). This is where liquidity comes in again. If the placement is too large the market lacks the liquidity to absorb the shares and the share price tanks. |
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Post by digger on Apr 7, 2018 21:49:13 GMT -5
Well, at least on Tuesday in Monte Carlo, Mike can now say we have about $30 million cash, or perhaps if Deerfield relaxed their covenant or took shares as payment, he could say around $55M. Even the former sounds better than going to the Oppenheimer conference and saying we have around $2M-$5M and need help ASAP I can't agree that it's better. Mike has now announced pre-conference that MNKD was desperate for cash and had to do this PIPE at a substantial discount to raise money. To the wall street sharks, that's blood in the water. To potential investors, that's a red flag warning that the company may be serious trouble. At the least MNKD should have waited until after the conference -- unless, of course, they were worried that what they were presenting might depress the stock further. |
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Post by mnkdfann on Apr 8, 2018 0:06:51 GMT -5
However, you didn't need to be a genius to see this coming. On March 14 the company issued a press release titled " MannKind Corporation to Present at Oppenheimer 28th Annual Healthcare Conference" and another on March 19 titled " MannKind Announces Participation at the H.C. Wainwright Annual Global Life Sciences Conference". That is about as subtle as erecting a red neon sign on the corporate headquarters announcing that a PIPE raise was imminent. The funds that attend these conferences, and especially those that go to the HC Wainwright conference, are not there to look for novel investment ideas; they are there to place money and the companies chosen to present are those that have a near term need for money. HC Wainwright is not a charity, they are an investment bank looking to make some bucks on the placement fees which is why they throw the conference!Since the financing deal is done (it seems), why even bother going to the conference? Well, true, it IS in Monaco. |
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Post by dreamboatcruise on Apr 8, 2018 13:42:04 GMT -5
You get the idea; once the company started signaling that they were actively looking for PIPE money anybody who follows this stock knew, or should have known, that a big raise was coming and given the lack of highly positive catalysts in the first quarter, the raise would likely be at a deep discount. Zacks knew this, TheFlyOnTheWall knew this, and you can be sure that a lot of other people figured it out as well. That is also why the PPS dropped from $2.71 the day before the first announcement to $2.20 the day before the PIPE was announced. Sure, the broader market was down a bit as well but MNKD was down more than its beta would predict. So it is almost certain that lots of people were short MNKD in the weeks leading up to the deal, and a lot of those covered and have locked in their profit. Given that, does it matter if the private placement shares themselves were shorted, or not, since all of Wall Street could see what was coming? The signs were there for those who choose to look for them. You got a lot of thumbs up for this post, though I suspect if you'd have spelled it out ahead of time you would have gotten attacked. |
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