So, on to step b, shorting at the top. Since you wouldn't be selling to yourself, obviously this means you're done buying. Again, in the bubble days, the retail investors might well have stepped in and provided your volume for you, but in 2002 when you stop buying it'll be impossible not to notice. Anybody who'd been riding your mo-mo will very quickly realize the game's up, and they'll be bailing right alongside you. Furthermore, since they'll be selling long shares, while you are going through the harder process of shorting, you'll basically have the lowest priority in getting filled. Before you know it the stock's crumbled back to $13 and you've barely shorted half of your long shares. Already you're in trouble.
We know that on January 19, 2001 GBIC, now Ladenburg, started short selling shares and continued throughout the year but especially heavy during news days. The total they shorted in the first three months of 2001 was well over 400K which is phenomenal considering the volume of REFR. We know that on a news day they shorted 31,000 shares in one hour @19.
We also know that the stock was walked down to 10.5 midday on March 13, 2001. Then the stock rebounded and went on to $30 within a few weeks. We also know that Asensio went to REFR on March 15, 2001 and said that he wanted them to sell him shares for a "friend" who shorted and could not cover on the open market. He implied that their not consenting might cause them a problem. They refused and he attacked them publicly in June 2001 until December 2001 when PR newswire refused to carry his garbage.
So now we are in a horrible bear market and the shorts still have to cover 2 million shares. Anyone on margin would have been flushed out the stock drop and anyone sick of holding REFR or who believed what shorts say would be out of the stock. So there is in effect a 2 million share buyback program courtesy of the shorts. And like the scenario indicates, their plan was not a well thought out one. Walking it down and hitting it's easy because they can, and have traded shares back and forth and shorted shares without borrowing. We know the MO.
ND |
