Hello gemsearcher,
I just had to post my thoughts after reading the whining going on the Stockhouse SUF thread. Your post was about the only one that made sense. Like there is some big conspiracy to screw existing shareholders.
The logic of their argument seems to be that because some larger trades happen below the market price, that someone is doing something nefarious with SUF (This probably comes from the CJ-conspiracy theories of the last couple years -- the ones about how many folks, especially those guys at de Beers, are trying to steal SUF's assets -- what a joke!)
Here are some flaws in their "fuzzy-logic":
1) If a big seller makes his/her intentions known around the street, who would buy stock? All pros would pull their bids, knowing that there was a "lid" on the stock until the seller was done. Thus, taking the sell side out, at any price, allows the stock to go higher.
2) The seller, in the absence of even a low-ball bid, may decide just to keep pummeling whatever bids show, a la the TK bidwhacker of several months ago. So the buyers did us a favour by scooping up some unwanted stock.
3) Size matters. If you want to buy/sell a large amount of shares in a relatively illiquid issue, then the other side of the trade knows that they have you over a barrel and will exact a premium. The side of the market that the premium is on indicates whether the cross was done at the terms of the buyer or the seller.
4) Yesterday, some joker, with an idiot for a broker, tried to offload 50,000 shares onto a bid of about 5800 shares right at 2.00. Having 44,200 left, this novice left the wad hanging at 1.99. Sharp traders immediately pulled their bids, and the next sellers, fearing a bit of a panic, sold onto the bids, driving the stock lower, and causing the panic selling this am. Note the house which sold the stock at 2.00 yesterday was not the same one that executed today's cross.
5) It takes much buying to make a stock go higher, because sellers always exist. But a lack of buyers can drop a stock very quickly, because the sellers will often panic. See Proctor & Gamble last week. This is SUF's recent legacy, and the reason that I believe that all long SUFfering shareholders owe a debt of gratitude to the buyers of all these crosses. Their buying power is probably the only thing keeping this stock from becoming a target of shorts, and other bad guys.
That is what I think,
Confluence |
