The Mythical Massive Naked Short (Rev.1) in Paychest
The following is offered to those board members that may be interested in critically evaluating the plausibility and reasonableness that a massive naked short exists in PYCT. Can a naked short exist? I'd have to say yes. Does an appreciable illegal naked short currently exist in PYCT, I'd have to say no. The rationale for my belief is provided herein.
1) FINRA has since June 2010, published in twice monthly FTD reports that there are zero uncovered short shares of PYCT, naked or not. Additionally, the SEC publishes, in twice monthly reports, the data from the National Securities Clearing Corporation's ("NSCC") Continuous Net Settlement (CNS) system on Fails-to-Deliver with the SEC cautioning that 'fails-to-deliver can occur for a number of reasons on both long and short sales. Therefore, fails-to-deliver are not necessarily the result of short selling, and are not evidence of abusive short selling or "naked" short selling.' I find it fascinating that none of the massive naked short advocates appear to understand the role and significance of the FINRA and SEC FTD reporting system. Just seems to go right over most shareholders heads. Overstock and Taser had naked shorts, which were depicted in the FTD reports, and the companies went to the courts to settle. PYCT had naked shorts identified in FTD reports back in 2010, but were since cleared up with nothing indicated today. Evidently few also don't realize that when a stock ticker symbol and cusp number changes, like when MLON changed to PYCT, that the naked shorts get cleared.
Some folks have even recently asked "What does it mean if the obo/nobo list share count on pyct is larger than the Authorized Shares on pyct?". The response to this question lies in the company statement from the 2Q2012 report discussing the reason for the DTC Chill whereby new unregistered shares apparently are being created from insider preferred share conversion activities which are evidently increasing the O/S to even exceed the A/S. Just who is doing these problematic conversions and to what extent is anyone's guess and only the company knows the answer (maybe they will enlighten the shareholders once the Chill is finally lifted).
From page 6: "The Company has been delayed in pursuing this due to a small core team that has been addressing a temporary 'chill' imposed by the Depository Trust Company and the extended absence of the President, for personal reasons. As far as the Company can tell, the temporary chill was triggered as a result of an increase in issued and outstanding shares, caused by preferred shareholders converting."
Evidently not being satisfied with this response folks have gone on to ask "now what if the pyct OBO/NOBO share list is four times larger than the Authorized Shares for pyct?" My response to this extremely unlikely and unfathomable quantity of alleged naked shorts would be to first scrutinize the pedigree of the OBO/NOBO list and how it came in to your possession. Have you or anyone independently verified the authenticity as it could have been tampered with or forged? Was the chain of custody for the document handling verified and did the document come to you from a trustworthy source? At this time I feel the need to say good luck if the list came from grant as he on numerous occasions has been proven to be a less than honest poster who has also displayed unethical behavior when he divulged a poster's personal e-mail address in this public forum. As such, IMO, he's proven to be someone that others shouldn't put their trust in.
So, with all this being said, if anyone thinks they've got solid proof then by all means feel free to share it with this board. Scan and post the OBO/NOBO list to this forum so it then can be independently evaluated. Also, post on how and when you obtained the list, and from whom (so that information can be evaluated/investigated as well). If you aren't willing to go this distance then how can anyone be expected to believe you or even try to help you verify if a massive naked short truly currently exists in PYCT. To not do so, and yet continue to scream illegal naked short, is just blowing in the wind (like grant does on a regular basis).
As there has not been one shred of proof offered or presented in this forum to counter the FTD reports which indicate there are zero naked shorts in PYCT, and based on the considerations above, I find it extremely unlikely any appreciable short position currently exists in the PYCT stock.
2) Hard time believing that everyone (e.g., the Market Makers, brokers, DTCC, etc.) is participating in some massive illegal coverup of a PYCT short. Such a dubious scenario would also then have to assume both Paychest and the TA may be involved as no publicly disclosed allegation of a short has ever been made, even after a couple of share audits were conducted. I can't honestly believe that everyone is out to take Paychest down. IMO, if an investor felt that the system was that corrupt and abuse was that rampant, then they may want to question why they are investing in the stock market in the first place.
3) It could be that only super-secret personal audits have uncovered an alleged massive short in PYCT. But, once again, if a short really exists where is the proof. I'd certainly like to see it. Without seeing some proof of its existence I'll continue to call any PYCT short as alleged, and I think many investors would agree with this position. Today's investors have demonstrated to be leery of naked short claims being shouted from message board roof tops. It looks like there are very few who take short claims at face value nowadays, especially when it comes to some massive short covering occurring just around the corner. And I certainly wouldn't consider it reasonable if I had to travel and have a clandestine face-to-face meeting with someone just to see if some proof really existed of an alleged short in Paychest. I personally know of no one who would consider taking such an extreme action for PYCT or any other stock for that matter.
4) Naked short theories evidently now have even permeated to try and explain the reason for the delay in retiring the 100 million shares Paychest bought in the open market in Feb. 2012, even though the company has openly stated in their 2Q2012 financial the cause for the DTC Chill was due to issues with preferred share conversions into common shares (refer to item #1 above for the company direct quote from the 2Q2012 report).
Who doesn't believe the company's explanation, since they are the ones actually working directly with the DTCC and TA to solve the issue? I do and fully expect that once the DTC Chill is lifted the buyback share retirement process will be completed with no fan fair offered about any naked short having to have been covered.
5) Hard time fathoming why market makers, brokerage houses, hedgefunds, or anyone for that matter would attempt to short a stock that is trading at $0.0001. The PYCT share price has been bottomed at that level for years with little to gain on the short side and a significant risk to lose much if Paychest were to move forward and succeed in their efforts. IMO, only someone that had insider information from the company, that it was heading into a BK or closure, would they then attempt to open costly PYCT shorts at this share price. Does anyone reading this post believe this may be the case? I certainly don't.
6) If I had proof positive that a criminal created and sold fake shares to my trading accounts over the last many years I'd be talking to my lawyer instead of posting about it on this message board. Surely, after all this time, if Paychest, or a major PYCT shareholder for that matter, was wronged and they had proof of a short, a lawsuit would have popped up by now.
7) So, where does this leave the PYCT stock? It looks like few investors are believing in a PYCT naked short claim while most appear to be turning away. If there was even a hint that a short in PYCT was true there should be hundreds of new posters on these boards talking about the PYCT stock and buying massive positions in hopes of a potential short covering rally. However, the pathetic PYCT trade volumes prove this isn't happening, as well as the stock price, where few if any appear even willing to put in a bid of $0.0002. If I truly believed in a massive short position existing in PYCT, I'd most certainly be willing to fork out $0.0002 per share and I'd be buying every share that I could get my hands on. And I'd bet many others would do the same. But, since I don't believe a short exists, and since the trade volumes and PYCT stock price continues to languish with a NO-BID over the last many months, I don't think other investors believe it either. Another way of looking at this is, would it be reasonable to assume a significant short really exists when there is no hint of anyone attempting to cover, even after Paychest issued their blockbuster announcements concerning the start of commercial production and their first Purchase Order contract? If a massive short existed I would have expected to see some type of action in the stock after such news, but none has evident over these last 5 months. Because of this fact, I think it speaks volumes as to whether there really is or isn't a naked short in PYCT.
Considering all the points presented above, I don't see an appreciable naked short existing in PYCT. If a naked short exists, even between FTD reporting periods, it would be miniscule. Evidently many investors must feel the same way I do based on the lack of stock performance over the last 5 months, where few if any appear to be taking an appreciable position to prepare for a potential short covering rally. Yes, I could be wrong in this assertion, but I seriously doubt it. On the other hand, I could venture and contend that in the absence of Paychest being able to provide verifiable significant progress over the last several months, that an alleged massive naked short (maybe a 5 to 1 ratio of shorts to issued and outstanding shares) could be developed to try and fulfill ulterior motives, such as potentially enticing more investors into PYCT stock so that others could attempt to sell their underwater positions. I'd have to consider this possibility much more likely than any actual massive illegal naked short existing which has been created through collusion, and hidden and unreported. If it were true that a naked short story had been fabricated for someones potential personal gain, I feel it would only serve to build up shareholder's hopes and mess with their emotions. And that would truly be a sad and unfortunate situation. |
