<<doesnt that Schawb deal, as you reported it, mean that Schwab now has an incentive to keep the price as low as possible?
since their payments are based on closing price of HSOA each day...>>
not as I c it.
first of all, think about this 4 a minute: why is Schwab offering me 24% for the privilege of "borrowing" my shares? If I agree to "loan" them (to repeat: I have NO such intentions), I still own the shares PLUS I get 24% -- that's a pretty good deal, don't ya think?
if Schwab is willing to pay me 24%, then that MUST mean that someone is willing to pay substantially MORE than 24% to Schwab to make it worth Schwabbie's while. remember, Schwab has all sorts of costs associated with this SLFP program: legal, administrative, regulatory, etc.
WHO would be willing to pay Schwab the equivalent of "X" over and above 24%?? THAT'S the $64,000.00 question, isn't it?
well, I suppose there r two possible scenarios (may be more, but these 2 come 2 mind):
(1) brokerage houses with naked shorts who need to cover their FTDs with "legitimate" shares; and/or
(2) short-sellers who want to accumulate more available shares to "borrow" and short.
OK, so the phenomenon is kinda neutral in its implication when considered in isolation, right?
BUT, u can't -- or at least shouldn't -- consider it in isolation. and, when u factor in:
(1) the short interest is now 11.9%;
(2) HSOA is on the Reg SHO list again;
(3) the very fact that HSOA is on the Reg SHO list creates a strong demand 4 shares to "cover" the FTDs (at least short-term);
(4) the stock already has been shorted mercilessly and it appears doubtful that any further significant short damage can be inflicted on it (remember, this is NOT a case where shorts may be hoarding shares to LAUNCH a short attack -- we've already had THAT happen in concert with the lemonshyster hatchet job);
(5) the FUD surrounding HSOA has been vanquished for all intents and purposes with the NASDAQ decision to list the company after careful, lengthy scrutiny of HSOA's bona fides;
(6) big money has been appropriated -- AND IS FLOWING -- for continuing Gulf clean-up efforts (including the new ARH deal);
(7) the company has firmly and publicly reiterated full year guidance;
(8) mgmt has consistently underpromised and overdelivered w/r/t guidance;
(9) earnings and the Q2 CC r only 3 wks away; and
(10) there r no shares available in the mkt to short HSOA,
the far more logical inference is that scenario #1 above applies, i.e., that the shares are coveted by brokerage houses with naked shorts who desperately need to cover their FTDs with "legitimate" shares now that HSOA is back on the Reg SHO list.
JMHO, FWIW. |
