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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: Joe Copia who wrote (332)7/31/2000 7:16:03 PM
From: zonkie  Read Replies (1) of 1426
 
>>>What if a stock that has ~ 1.5 mil float (fact) and has ~ 2 mil+ called for delivery, what are the implications?<<<<<

I know you didn't ask me my opinion but since I think I know what you are wanting to hear I am going to throw my 2 cents in anyway.

You're wanting to hear that the implications are that the stock has to go through the roof because of the 2M called for delivery. While this is a possibility I think there are many other possibilities that could just as easily happen, all of them bad. Here are a few things I would be more likely to believe.

There are insiders (or people in cahoots with insiders) who are doing the shorting. These people have options or 144 stock that they can use to cover their short with so they are at no risk. If this were the case someone might ask why don't they just sell their stock. There are several reasons why they can make more by hedging now and selling or covering later. A few of these are:

1) They have more stock available so they want to keep the price as high as possible while they build their position. Since they know they can tank the price of the company at any time and cover they want to short as much as they can at as high of a price as they can.

2) If they are shorting 144 stock they might be building their position now while the price is higher than they think it will be when their stock is eligible to be registered.

There are many ways companies can inflate the price of their stock to their own benefit, several of which are:

1) Payoffs to brokers in cash or stock but usually a payoff is done by giving them a percentage on the stock they sell and keep sold (talk their clients into holding or not selling when they say to). These payoffs are given so that the broker will sell the stock to his clients.

2) Big time bulk email spam promoting the company to the public. I think this will give a company a quick spike better than anything if the spam is sent to enough of the right people. Millions of spams are required.

3) Phony cross trades are between accounts they control are sometimes used to keep the stock price up.

4) Payoffs in stock, cash, options, 144 stock but usually in free trading share of the company to stock touting webpages on the internet. I firmly believe that sometimes when companies buy the services of these types of touting services that touts post at the SI, Raging Bull and other more minor stock chat sites.

5)Payoffs to people that do their touting on chat sites.

6) A series of phony or dubious PR's to inflate the stock price.

This is by all means not all of the things that I think may be going on but I think you get the idea.

I am glad you didn't mention the stock you have in question if indeed it is a real company because I wouldn't have been able to express my true opinion about some of the possibilities.

It is also a possibility that what you were wanting to hear will happen but I believe that if you invested in 100 deals like this you would lose on at least 95 of them if you hold very long. I would keep close watch on the float and outstanding because it may go up at an alarming rate anytime.

All of the above is only my opinion, I am not accusing anyone directly of anything.

The reason I wrote the above is because 2M called for delivery with a 1.5 M float sounds like a Riley or Pugs story.

Kindest regards;

zonki.............WAMM #1
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