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A fellow I know asked me to post the below on his behalf. He's not allowed to post on SHU.
I do so because he has some interesting views to contemplate.
QUOTE
The large decrease in shares short over the last two reporting periods is telling us something; let's consider some:
12/13: 11, 613, 863
12/31: 9, 887, 592 ...... down 1, 726, 271 = 14.86% !
01/15: 8, 938, 351 ...... down again 949, 241 = 23.0% decr. in 1 Mo!!
In contrast, the SHORT interest decreased only about 11% after IOC announced exclusive negotiations with XOM.
Now, considering the pps action, this could be read a number of different ways. But it seems to me that, at least, there's been a whole lot'o covering goin' on (at a nice low pps, possibly manipulated.) I don't understand enough about dark pools to know what leviathans could be lurking there and am keeping my expectations low regarding relief from the shorts... for my emotional sanity's sake if nothing else. But this appears to be a very positive development.
I humbly propose the following inferences might be true.
1. Some hedgies believe the writing is on the wall. It's a good deal and it's highly likely to go through. Covering 23% of shares previously held short is probably not something to be ignored by investors. It seems like a gambler's "tell."
2. This pattern of covering might lead others to do the same. No one wants to get left holding an empty bag; their bosses wouldn't like that. Shorts win when others are shorting too; they need back-up.
3. One or 2 SHU-ins here have said they have reason to believe that there are HF traders waiting in the wings to invest when the deal happens. If that is the case, maybe HF shorts know that as well. Again, wanting to avoid empty bag syndrome— or should I rather say...significant loss syndrome. I hear it can be fatal, especially if there are pre-existing conditions present. Tough business.
4. Whereas this may, or may not, loosen up the squeeze a bit, I'm only wondering if it might also decrease the degree of manipulation possible – like by ~23% or so. That might be goofy thinking. I don't know if, all other things being equal and these converted shorts won't return to their wicked ways, that it could actually work that way. As to the squeeze, if there is HF $$$ waiting to come in, we still could get a hangman's noose squeeze.
5. Further, maybe shorts are hearing rumors that IOC Management/ BOD is looking into addressing their shenanigans and want to make their trading action look more reasonable. I mean really. Shorting the living daylights out of a stock that's undergoing a transformational deal – even if the rollout was poorly executed?
END QUOTE
Drivel Maven with Personality
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02-03-2014, 11:55 AM
(This post was last modified: 02-03-2014, 08:54 PM by ebster123.)
Stavros, great post thanks!!!
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'Stavros' pid='36955' datel Wrote:
A fellow I know asked me to post the below on his behalf. He's not allowed to post on SHU.
I do so because he has some interesting views to contemplate.
QUOTE
The large decrease in shares short over the last two reporting periods is telling us something; let's consider some:
12/13: 11, 613, 863
12/31: 9, 887, 592 ...... down 1, 726, 271 = 14.86% !
01/15: 8, 938, 351 ...... down again 949, 241 = 23.0% decr. in 1 Mo!!
In contrast, the SHORT interest decreased only about 11% after IOC announced exclusive negotiations with XOM.
Now, considering the pps action, this could be read a number of different ways. But it seems to me that, at least, there's been a whole lot'o covering goin' on (at a nice low pps, possibly manipulated.) I don't understand enough about dark pools to know what leviathans could be lurking there and am keeping my expectations low regarding relief from the shorts... for my emotional sanity's sake if nothing else. But this appears to be a very positive development.
I humbly propose the following inferences might be true.
1. Some hedgies believe the writing is on the wall. It's a good deal and it's highly likely to go through. Covering 23% of shares previously held short is probably not something to be ignored by investors. It seems like a gambler's "tell."
2. This pattern of covering might lead others to do the same. No one wants to get left holding an empty bag; their bosses wouldn't like that. Shorts win when others are shorting too; they need back-up.
3. One or 2 SHU-ins here have said they have reason to believe that there are HF traders waiting in the wings to invest when the deal happens. If that is the case, maybe HF shorts know that as well. Again, wanting to avoid empty bag syndrome— or should I rather say...significant loss syndrome. I hear it can be fatal, especially if there are pre-existing conditions present. Tough business.
4. Whereas this may, or may not, loosen up the squeeze a bit, I'm only wondering if it might also decrease the degree of manipulation possible – like by ~23% or so. That might be goofy thinking. I don't know if, all other things being equal and these converted shorts won't return to their wicked ways, that it could actually work that way. As to the squeeze, if there is HF $$$ waiting to come in, we still could get a hangman's noose squeeze.
5. Further, maybe shorts are hearing rumors that IOC Management/ BOD is looking into addressing their shenanigans and want to make their trading action look more reasonable. I mean really. Shorting the living daylights out of a stock that's undergoing a transformational deal – even if the rollout was poorly executed?
END QUOTE
Interesting thoughts - so why has the cost to borrow gone up?
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Possible some bigs have stopped loaning shares
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'ebster123' pid='36959' datel Wrote:Possible some bigs have stopped loaning shares
Partly correct I think.. Its possible that during the Dec disaster, several of the mid sized or even a larger holder(s) exited - don't know yet but probably a safe bet. These "weak hands" could have been lending out all along, hence the turnover resulted in less available to lend and thus the rise in borrowing costs this month.
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I believe there is something else going on, but I do not have all the data to confirm this. My broker has increased their loan rate from 3% on IOC shares to 7% over the last two weeks. I have been hounded to loan my shares on a daily basis. This tells me one of three things.
1. Shorts are loading up for another raid. I think this would be risky at this point since we seem to have found a floor.
2. Large players are positioning their shares in ways that they are no longer available for loan such as selling covered calls. I have not followed the option volume recently enough to confirm whether this is reasonable or not.
3. Shares are turning over and are not immediately available for loan by large players - meaning the shareholder base is becoming more fragmented. I would consider this a good thing.
If it were true that the shorts we getting nervous and covering, you would assume there wold be shares available to loan and brokers would not need to increase their loan rates.
Maybe some of you from the trading world can shed some light.
CF
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Maybe some large holders are pulling their loans or not loaning the shares out any longer.
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'trans' pid='37055' datel Wrote:My take......Go check out SHU NQ thread titled "Implications of Dec 21 Put Exercise", a stunning thread lead by harry 2013 and junktrader describing the covering of NQ short position in Puts. First, they had huge put positions that were rolled forward every month NQ was in play by the shorts. Interoil last Fall had huge put positions rolled every month, 20-30,000 thru the Dec. opt expiration. Going back to NQ, junktrader said when the shorts stop rolling the large deep in the money put positions forward, that signals they are concluding the short trade...a valuable signal. First, they exercise the deep in the money puts, and then buy NQ stock on the cheap to deliver and close out the put option positions. Then, they start working on covering the common stock short position. Guess what? IOC Dec large put positions WERE NOT ROLLED either. Stock in early Dec went down to 51, then bounced to 62+ quickly. I believe that was the buy in of stock to exercise and close the IOC deep in the money put positions. Then the stock settled down as the common stock is being covered. That's what's been going on til the lat several days,but on balance, my work says the short position is being covered on balance. If true, then the IOC shorts are closing out the short trade. The sharp drop in short interest last couple of releases would suggest that the large puts were closed out, as it shows in January, no big put roll. now if correct, more gradual short covering of common, a good sign for IOC longs. This phase the stock is market down early and essentially traded sideways rest of the day. Intraday OBV shows that very pattern, imo
That NQ thread was back in on 12/23/13, check it out.
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'Getitrt2' pid='37052' datel Wrote:Maybe some large holders are pulling their loans or not loaning the shares out any longer.
Why not loan out ones shares? Please don't provide an altruistc reason.
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'Putncalls' pid='37059' datel Wrote:
'Getitrt2' pid='37052' datel Wrote:Maybe some large holders are pulling their loans or not loaning the shares out any longer.
Why not loan out ones shares? Please don't provide an altruistc reason.
To help your stock go up, if you have all you want or can buy. I am not citing evidence, just throwing out another possibility, but now I notice ebster and Dr Wu had already thrown out part of that.
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