VFS manipulation.. a fun play if you have the gonads for it!
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Anatomy of a pump and dump game: From how Lawrence Ho and co set it up to the stock manipulation on Aug 10, 2023
How Lawrence Ho and Co set it up
Lawrence Ho and Co set this game up since March 2023 and start reaping some albeit minimal fruits on Aug 10 2023.
He has no interest in helping Black Spade Acquisition Co (BSAQ) public shareholders to make money. His sole intention is to unload his cheaply acquired BSAQ shares under sponsor privilege at a price as high as possible to maximize his profit. Talk about a shady casino guy from Macau.
Dennis Tam, chairman and co-CEO of BSAQ, right-hand man of Lawrence Ho from Ho’s Melco, get acquainted with Pham Nguyen Anh Thu, a director of Vinfast, through a business event in Vietnam in 2015. The two kept contact. On Nov 22, 2021, the two exchanged each other companies info, but at the time, Vinfast was preparing for a direct IPO, working with the like of JPMorgan as underwriter, and not interested in BSAQ merger. BSAQ went on looking for other acquisitions, having talked to over hundred companies but had not found a suitable target (or maybe no one like them). The clock was ticking on July 20 2023 for BSAQ being dissolved if no merger is done and no extension is made. Lawrence Ho and Co. sat on 10.6M shares (Founder shares + warrants) at a cost of $0.6 each, and he wanted to cash out on these shares, knowing that any IPO will earn him huge return.
On March 30, 2023, Dennis Tam reached out to Thu Anh Pham to see if VF was still interested in a merger. Thus, BSAQ fished VF first. VF at the time has failed the traditional IPO, and the clock was also ticking, with mountain of debts. BSAQ aptly knew what VF wants: IPO for stock pumping and boasting. Perhaps, VF is the only one with big scale operation outside the entertainment industry who is willing to do a merger with a SPAC that was founded by casino guy looking on the premise of targeting the gambling and entertainment industry, aka the Casino SPAC, literally. It is a huge hit for VF’s reputation for stooping from the JPMorgan level to a Casino SPAC run by a guy in Macau. But VF was desperate. Dave Mansfield, the CFO, would likely be on the chopping block if the US listing is not done by the end of the year.
From that moment on, hooking VF with the bait it wants, BSAQ management was doing every thing it can to make the combination happen, not driven by finding the best solution for the BSAQ shareholders (if it did, it should negotiate for a third party fair-value evaluation of VF) but by enriching Lawrence Ho and Co as much as possible, thereby agreeing to the ridiculous $23B valuation of VF. The figure can only be thought of as a joke in the US finance industry but they pressed on anyway, for the game.
The two troublesome parties, whom professional investment banks have shunned both, collude together on a scheme to dump shares at pumped-up valuation on retail investors instead. They set up the game and the date.
The pump on Aug 10, 2023
The two parties prepared all the necessary paperwork. They gave the existing BSAQ shareholders a chance to redeem share for cash before the proposed merger voting because it is required to do so by law and by the BSAQ shareholder terms, not out of generosity. 95.3% of existing shareholders redeemed their shares for cash, a huge rebuke to Lawrence Ho and Co, because these are professional finance guys, they clearly know the $23B valuation is a sham and they do not want to participate in Lawrence Ho’s game. Nevertheless, the merger proposal was set up in such a way that even if 95% of shareholders withdraw their money, it cannot be failed, and as expected, the merger proposal got approved with 99.9% approval from the remaining shareholders, of which 80+% are BSAQ management.
The date was set. Aug 10 is the day when BSAQ shareholders voted. The outcome is known in advance for every one who can read SEC filings, because who did not leave would vote yes, guaranteeing a merger success. The stock driver team stands by. Before the actual D-day, the stock driver team try a small scale test run, driving BSAQ from 10 to 12 (20%) and then back down to about 10 on a span of 5 sessions from Jul 28th to Aug 3rd.
Came Aug 10.
The voting happened at around 9:26AM.
Then about 2 hours after that, enough time for the PR Newswire to spread out the news of 99% approval (the 8K filing was not done 2 days later, in which it was revealed that further $15M was withdrawn, but this is not important anyway), at 11:30AM, the BSAQ pump began. BSAQ jumped from $10.55 to as high as $22.7 (100% increase) in just about two and a half hour time-span from 11:30 to 2:00PM, with a volume of 239,567 shares at a total value of approximately $4.2M, before settling on the closing price of $18.5 for the day, for ~70% jump in 1 day.
Usually, and sensibly, a stock goes up hugely if there is some good news, unexpected news, that could drive the earning of the company or improve the company’s business in a significant way.
Does the spike due to some unexpected good news unknown to investors? No. A big No.
The merger is not new news to financial professionals to cause a spike by surprise: the outcome is known in advance before the meeting, as outlined above. It is also not a good news as no big new money was raised.
Since there is no surprise in the merger news and there is no good news, and the general retail investors have not heard much about BSAQ, an obscure ticker among thousand tickers on the market, the “pumping by the news” trick is done by Lawerence Ho and co. They are the single biggest benefactor from this. massively (of course, they engineered it).
Not by other big boys. It is a fact that no institutional investors are interested in the BSAQ / Vinfast stock or currently holds BSAQ because of the very bad Vinfast financial picture coupling with the ridiculous valuation at $23B. Failed direct IPO, failed SPAC PIPE, no investment bankers join the scheme even though they certainly have a front seat to scoop up shares before the listing.
Only Lawrence Ho and co have the motive and the means to pump the stock for personal gains. Not enough retail investors yet to pump this up 100% in a day.
Pumping stocks, those with limited supply and low liquidity, does not require as much money as you might have thought
They started pumping the stock at 11:30AM Aug 10 using about $2-4M (just a chump change, really small and tiny amount in the world of finance) to drive it up to $20.48 on just 239,567 trading shares. If they day trade, making several rounds of buying and selling on the same day from the same accounts and left hand accounts to right hand accounts, the amount needed would be even less.
As you can see, with the limited supply and small volume (no big short yet, not enough shares available), with a meager $2-4M, they can drive the price double from $10.55 to $20.5 in 2 and half hours. This is all facts and figures, cold hard numbers. You can check the price and volume on virtually any trading platform!
The volume tricks
Before the meeting: 2,749,285 Public Shares (BSAQ Class A, cost $10 each) + 4,225,000 Founder Shares from management (BSAQ Class B, cost $0.004 each).
After the meeting: 1,308,900 Public Shares (Class A) + 4,225,000 Founder Shares (Class B) = 5,533,900 Ordinary Shares.
Present at the meeting: 5,372,291 shares. That means 5,533,900-5,372,291 = 161,609 shares are in the real public hand / retail investors (or simply those who don’t care).
The Founder Shares (Class B) are not allowed to be sold before the merger completion date, expected to be Aug 14. Thus at the time of the meeting, there are only 1,308,900 public shares (Class A) available to trade on the exchange, of which 487,701 is hold by management.
Yet the total volume for Aug 10 is 4.734M shares. The on-exchange volume is 565,701. How come the day volume greater than the on-exchange volume and greater than the available share to sell, 1.308M class A shares?
It is partly due to left hand to right hand day trading. And also due to a big chunk of that 4.22M class B shares moving from left hand accounts to right hand accounts, off-exchange in arranged transactions. Off-exchange arranged transactions do not change the price, only direct buy and sell on exchange cause a change to the listed price through bids/asks.
This serves two purposes: moving the class B shares to accounts that is easier for the dumping, and also, to pump up the daily volume to be much bigger than it looks to justify the spike in prices, while in fact, only about 1/8 are traded on the exchange.
The dump on Aug 11 and 14, 2023
By spending a few millions, Lawrence Ho hopes to generate buzz on the market: hey, BSAQ increases 70% in one day because of a merger with Vinfast (that 70% figure indeed made into news). Lets buy in this new IPO for a quick buck. So thought traders / retail investors. Out of FOMO (fear of missing out).
After generating the buzz and get a sense of how many retail investors piled on (they know this since they control the much larger number of shares and control the insider accounts who sell), it seems that not many retail investors took the bite, at least to their liking. So on Aug 11, they started the dump. With a mere 54,638 shares valuing at approximately 846K, they drop it to $14.64, a 21% decline in one day. As you can see again, price can change drastically and be manipulated easily when the volume is small.
There was no real interest in BSAQ: for one hour from 11:30 to 12:30 Aug 11, only 784 shares were traded.
On Aug 14, they dump the stock again to $10, a 30% drop in a single day. With minimal volume again. Not difficult.
Note that they use the volume tricks I mentioned above for the day's volume appearing bigger than it should be.
Is the drop caused by big short? No.
On Aug 11, there were 34,700 share shorted. After Aug 14, there were 39,900 share shorted. This is fact.
Thus only 5,200 share were shorted on Aug 14, valued at about $50K, a very small amount, and are definitely not the cause of the huge 30% drop.
Thus, the drop is caused by Lawrence Ho and co purposely dumping to get his money, as well as his trying to entice retail investors to jump in.
What is their strategy?
Drop big and pull up big to cause FOMO. And unload their shares along the way to retail investors. That is all.
When a stock goes up big on good news and large volume, it tends to stay there for a while, accumulating before going up again. When a stock is pumped and dumped, the chart looks like a thorny pike.
Their hope is that by making the stock dropping big, retail investors will pile on to scoop beaten down “cheap” stock. If there is not enough interest, they will drop it further.
Always remember, their cost is only $1.86/share.
It is a pump and dump game in earnest.
Dont be surprise if VFS again double on the first day of listing on Nasdaq ! It could be traded from $20-$25 on the first day, all depending on what price Lawrence Ho and Vuong Pham wants. They certainly can manipulate that, with not so much money.
How to defeat the shady game of Lawrence Ho?
Will the SEC catch him? Probably not, because it is likely that no retail investors will ever file a complain. To file a complain, you need to be a victim and have substantial evidence. These guys are master in financial games, albeit crooked ones. They know that it is difficult to catch them.
They brazenly play the pump and dump game at stupid valuation for all to see because they thought that no one will call them out, that no one will bother to read the SEC filing, and that journalists will be lazy, as usual.
You can defeat Lawrence Ho and co by not buying into the scheme, do not let the greed consummate you even if BSAQ / VFS doubles again tomorrow, or halves, for that matter.
That way, Lawrence Ho and Co can do the trade left hand to right hand as many times as he wants, driving the stock as high as he wants, even to $100, but with no new money coming in to hold the bag, he is still left with all the shares, at inflated price. And incur trading cost. That ways, the price is drifting to $5 while he still holds most of the bags. In the last few days, Lawrence Ho and co have only been able to unload a fraction of what he holds (say, about few hundred K of shares out of 10M shares, based on the traded volumes on the exchange during normal time).
So will Lawrence Ho success in his scheme?
It is all up to whether retail investors driven by greed participate in Ho’s game. Not anyone else.
Don't fall for it.
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Source:
sec.gov
shortsqueeze.com
tradingview.com
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