I didn't ignore these scenarios.
You wrote: "First, the short interest rose steadily all spring, a period in which you claim Castle Creek was not shorting."
Why don't you respond to my point? I discussed this clearly in my post. I said that if CC was still short a lot of shares from last spring, say in the 7s, then they certainly would have converted preferred shares and gotten common stock at 4.47 to lock in a gain of 40%+ on September 13. But if that was the case, why were they still selling shares from the conversion the last two weeks? They wouldn't have any shares left to sell.
If CC had shorted a lot of shares last spring, then consistent with the selling over the last month, they would have converted more than 700,000 shares. They didn't, so at the time of the conversion, its unlikely that they were net short a lot of stock from last spring. Incidentally, this doesn't mean that they didn't short some shares above 7 last spring, and then buy some long shares in the 5s, in July to offset. I'm just saying that if CC has been the big seller who has sold close to 700,000 shares over the last month, then its unlikely they had a large net short position when they decided to convert.
You and Zeev claim that CC shorted a lot of shares last spring, without driving the price down, then shorted even more shares in August, this time driving the price down. Then Zeev says they covered in the 4s, without driving the price up. Then he says they started shorting the stock in the 5s again. All this with really no evidence from watching the tape. Zeev apparently believes CC are Superman traders. They can buy large amounts of a thinly traded stock like VLNC, and the price goes down in spite of that. Then they turn around and sell large amounts of stock, and the price goes up!
This "Superman trader" theory is ridiculous. It assumes the other participants in the market are dupes. It is far more likely that when CC sells, the stock price goes down, and if CC buys, the stock price goes up.
The tape action is clear... there has been one large persistent seller over the last month. I still can only find one party that could be that seller, and that is Castle Creek.
Paul |
