Let me take a crack at answering your questions, Geneat.
<<1. Why would the accumulators have a program of spending a fixed increment of their investment money each day, and quitting when it is spent, i.e. how do they benefit from such a systematic approach, as opposed to simply buying opportunistically?>>
For one thing they can prevent a serious run-up in the stock price by buying in increments. Investment Funds rarely take a position in a company in the public market in one shot. They almost always accumulate over time. Also, and I know this may sound silly, you have to take into consideration the time difference. If the money is coming from Abu Dhabi you've got to remember that the stock market in the US doesn't even open until 5:30 PM their time. Assuming that they have normal business hours, that would mean that they had already been working for 8 1/2 hours by the time Wall Street opens. Maybe these guys don't feel like staying in their offices until midnight. Could be that simple.
<<2. Who is doing what that holds the price between $2 and $4 while these accumulators buy up fifteen or twenty percent of the outstanding shares? It has to be quite a trick and one which I would like to learn, because I have a hunch that if I just walked into my broker and started spending $20,000,000, the price would shortly go ballistic, no matter what I chose as a buying schedule. >>
You are absolutely right...the price would go ballistic. But if you only decided to spend $1.5 million and spread the buy orders among a large number of brokerage firms, you would have less of an impact on the price. I've been told that there were a ton of market makers on the BID last week all competing for stock. They were the usual names associated with small-cap stocks since none of the major firms makes a market in AIPN. However, the orders could easily be coming from a Prudential or a Merrill Lynch even though their names do not appear on the BID.
<<Moreover, why would Geo. Faris, the insider Kazaks, the mm's or anyone else cooperate with the accumulators in their efforts? Is this not inimical to to interests of everyone except the accumulators. >>
It was not my intention to suggest that George Faris or anyone else is cooperating with the "accumulator". If George Faris knows the investor, then it would be normal for him to have shared his enthusiasm with him using publicly available data. There is nothing he can or, in my opinion, would do to control the market. He can share his excitement with major potential investors but it is really up to the latter to try to prevent a runaway shareprice should they decide to take a large position. In my opinion, this investor knows that AIPN has tremendous potential and that the concession is very valuable. He also knows that AIPN has been in talks with all the majors (we all know that). He probably also knows that negotiations of this sort are complex and take awhile so there is no sense of urgency to get all 6 million shares in one day. When I suggested that, once the accumulation was over, there would be major news, I did not mean that such news was being withheld. It's just that the kind of major news that I am looking for is not the kind that will be locked up next week....but I believe that it is definitly coming down the pike...so does the "accumulator".
<<A corollary question is just who is selling this 6-8 million shares at these prices? >>
I heard that DH Blair was a seller last week. Remember that there are a lot of individuals and brokerage firms (small ones) that own this stock at prices way under a dollar. There are about 40 million shares out there. I'm not surprised to find that there might be about 4 million (half last week's volume) for sale at these prices. Then you can add daytraders, people who bought in at $2 last week and were quite happy to take a point and a half, etc., etc.
Hope I've answered your cooncerns.
To answer your question , Sue, here is something I posted on AOL:
Subj: Dumb Advice
Date: 97-09-19 16:15:02 EDT
From: Bouhafa
Dasher, in my opinion your broker made a serious error of judgement when he sold and recommended that you do the same. He obviously doesn't understand this story very well. Who in their right mind would sell stock in a company in the face of clear evidence that someone is taking up to a $20 million position. Does your broker think that's "dumb" money talking. If he does I would disagree. Do you think the people who have been buying up millions of shares of AIPN would be doing so if there was the slightest chance that they would lose.Remember, AIPN is to institutions, including those in the Middle East, only a tiny, unproven oil company. You might speculate with $1 million but you don't put $20 million into such a company unless you are pretty damned sure that your investment is safe at this level. You also don't put that kind of money in a "rinky-dink" oil company if you feet that there is the slightest chance of major share dilution as a result of failure to redeem those debentures. This is a whole lot of capital at risk and, if its origin is Middle Eastern, I can guarantee you that it is normally conservative money. Middle Eastern investment companies don't fool around with low priced stocks of unknown companies. They like to invest in companies they've heard of...large caps like GE, Microsoft, Disney, etc. The only reason such an institution would commit so much capital to AIPN would be that they know that this is a very big deal involving lots of oil and a very lucrative partnership down the road. Bottom line, your broker should have been telling you to buy more stock.
Cheers....Faris
Hope that helps, Sue. |
