Peter - quite correct!
In the case of CLPA, one of the stories that has circulated on Raging Bull is that Susquehana, which was in on a May 1998 private placement, had shorted the stock heavily last year in anticipation of getting in on another PP. As the story goes, they had also started as an MM the morning of the crash last year, so they probably felt they had a lot of ground to make up with the stock. However, they were not included in the PP last Fall, and thus shorted heavily against anticipated shares they did not receive. This left them rather in the lurch. As the situation clarified itself, they may have participated in the short squeeze that has befallen CLPA. They had no convertibles from the original PP that I know of to use as a hedge, only those shares they gained, which they may not have kept. In the case of other institutional shorts of CLPA like Avalon, they are rumored to have been the beneficiaries of bad advice from Sturza and also shorted heavily without careful consideration of the science. Collectively, the shorts have been squeezed badly here. I gather the FDA reviews CLPA's drug, Aptosyn, tomorrow (Tuesday), and the announcement of the review will come soon. If the shorts have left a substantial position in place as a hedge, and Aptosyn is approved, well....:)
Or so the rumor goes... |
