Sylvain: If you take a tax loss you must wait 31 days to repurchase; if you don't claim a loss, you can repurchase in 2 min..
First of all, you have to realize that entities like Select are NOT looking to repurchase at a lower price. They are not shorting the stk. in the true sense of the word; they are selling shares that they do in fact own, but cannot legally sell at this time. Similar to Reg. S shs., which aren't supposed to be sold in the U.S. for a 2 year period after purchase. It's called "shorting against the block". Ex: if Select was given 500k shs. of UMSI for their services, that stk. carries a legend (or letter), and cannot be sold for a certain period of time. It is certain that the stk. was given at a discounted price (probably somewhere around .10). Now, Select has (or has not) performed some service and has received no money (or very little, whatever the case may be) so far; so, what they do, is short the stk. to raise cash (sort of like a covered short). They are not looking to repurchase to cover their short, they already own it. Should there be a buying frenzy, and the price rise, they do better; should the price drop, so be it, they still get their cash. As long as no one has requested possession of their shs. (which is usually the case) they can continue indefinitely without fear of getting caught.
GeneM |
