Hi, fox -
Apologies for the late reply.
Catching up on posts, I see The_Chief and Rob Thomas have been in a great debate about shorting. I suggest that readers pay more attention to where they agree, than where they disagree.
The presence of significant shorting is where they agree. DMX isn't the first stock to experience this.
In previous posts, the change in how financing is conducted these days was alluded to... it's a whole different game, now. It has to do with capital pools, syndicates, and hedge funds. PIPE financing has become huge; the availability of offshore capital from various "sources" makes the use of traditional financing methods - such as straight VC funding - an alternative, now.
There are different capital pools: a hierarchy. To a large extent, the company drawing from these pools is a prisoner of its status and history. The "well" from which a given company draws its "water" determines many things.
Allusions to the "quality" of players in syndicates associated with past Dimethaid financings have been made here; the history is known to any diligent investor.
In addition, the presence of known shorters is a facet of existence for public companies in both the US and Canada.
I'll try to answer your question this way:
1 - Have hedge funds, and shorting resulted in the death of publicly listed companies? Is this documented?
Answer: Yes
2 - Is the presence of short syndicates and short "lone sharks" a known fact?
Answer: Yes
3 - In the case of DMX, is it possible to distinguish exactly which shorting is retail, hedge funds, lone sharks, and offshore/onshore?
Answer: No. Not for the retail investor.
4 - Is there any way to stop this?
Answer: Yes, but not easily. It's become increasingly clear that capital growth through financing of public companies has changed to a parasitic practice. The original concept, where capital shared risk has changed. Increasingly, capital is not the servant of enterprise, but a means and an end to itself. Now, the host - the public company - may either die, or become prey to hostile practices (including both shorting and accumulation) in the name of - capital. Whether the underlying company has a product or service that's of value to society may be irrelevant, except to the extent that it can generate returns for players whose only interest is money.
Even in a so-called "conventional" financing by other companies, with x million units consisting of shares and warrants, we've seen the warrant position hedged immediately - it shows up in the short position right after the financing closes.
Easy money. Made twice.
The investment industry itself - brokers and dealers, the hidden players in these "syndicates" and capital pools - are in collusion. Self-regulating, my ass. It's a sad, sick joke on the public.
I leave it to you whether these practices serve us well. To the extent that pension funds have now become major players in equity markets - I suggest that even non-investors are being fleeced several times over.
It remains to be seen how this will work out, but at present the retail investor is at the short end of a long chain.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Dimethaid may be able to escape. In future, the company may draw its water from different wells.
Recent actions of new management are the equivalent of watching a tightrope walker teeter across a gorge, a mile wide and a thousand feet deep. With 50 mile-an-hour wind gusts.
They've made it to the other side. Bravo!
Now the real work begins.
Regards,
Jim |
