Three days after hitting an alltime high of $11.85, Crystallex has nearly
halved as it closed at $6.90 on Thursday on massive volumes. This cut
nearly $300 million from KRY's market cap in 36 hours.
Crystallex was down $2.35 to $6.90 on 2.8 million shares traded on the
TSE and 2.8 million shares traded on the AMEX for a combined total of
5.6 million shares traded. This occured as the stock garnered massive
attention from pro-traders, shorters, flippers, institutions, funds and
brokers.
The cause: Asensio. But why?
A pause for thought: Recently a number of institutions and media
people, even Placer Dome themselves, have stated that the reason that
Placer's stock is underperforming is because everyone is waiting for the
ruling from the Supreme Court of Venezuela on the Las Cristinas 4 & 6.
If this is the case, why has Crystallex fallen nearly 50% in three days
while Placer has also fallen almost $1 in the last three days to $17.50. If
it is SO clear that Crystallex has no chance at getting the Las Cristinas,
why aren't investors pouring money into Placer? The Answer: Because
Asensio's comments border on being completely irrelevant.
What we are currently witnessing is true
warfare. If you are a Crystallex
shareholder right now you are a casualty
of war.
We have spent the past 24 hours trying to
figure out what Asensio is and why he
chose Crystallex. The Answer: It gets
complicated. We do know this, however:
Asensio is a confessed short seller. As a
matter of fact, our sources stated that in
talks with him in the last year he has
stated that ALL he does is short sell. That
is fine. There is nothing wrong with short selling. However, is it
possible that Asensio was caught offside to the tune of millions of
dollars when KRY went from $2 to $11.85 and decided that the legal
risk of being charged with fraud outweighed the financial risk? Anything
is possible in this game!
Who is Asensio? Manuel Asensio is an investment banker,
undergraduate at Wharton, Harvard MBA with Latin American banking
experience and M&A polishing at Bear, Stearns. He also has had his own
legal problems and has been successfully sued for fraud in the past and
had to pay retribution of more than $200,000.
A quick recap:
Asensio states that, "There does not exist any question concerning the
title of ownership to Las Cristinas 4 & 6". Call Placer Dome and ask
them. Even they admit that there is a 'question of title' although they are
adamant they will win.
In order to show how 'corrupt' Crystallex's management is, the only
'dirt' they could get was that a company that Marc Oppenheimer USED
to be involved with was halted recently for 30 minutes after not paying a
small fee. What??!!
Even though Asensio's arguments seem pathetically inadequate, one
thing is for certain: Asensio & Company have power. They have
managed to cause a hysteria on KRY shaking millions of shares out of
the market.
No matter what has happened in the last few days to the price of the
stock, there still remains one question and it is really the only question
that matters to Crystallex in the long run: Is Crystallex awaiting a fourth
ruling from the Supreme Court of Venezuela on its ownership of the
Las Cristinas 4 & 6?
In the short term, what will happen to the stock price? This is a variable
that we are unsure of. Just how many people follow Asensio and short
based on his recommendation? Will the 4th ruling come out and be in
favor of Crystallex? Will any commentators come out in direct support
of Crystallex or against it?
The future in the next few days is certainly uncertain. However, on the
bright side, it is a traders dream. Huge volatility and massive volumes
create opportunities. It is our opinion that there is major support at the
$5-$6 level and that it should hold at or near current levels on Friday
barring any new events.
For your interest, here is a letter which was sent to VHeadline/VENews
from the portfolio manager of the NewCap Contrarian Fund:
Dear Roy:
We have been following the Asensio story regarding KRY
closely. I have attempted to phone, fax and email Asensio with
no success. Emails are returned undelivered. The phones ring
busy.
Last year after I appeared on CNBC in September, Manuel
Asensio called to inquire regarding our knowlege of KRY. He
at that time told me that he was short the stock. Therefore, his
current releases saying that they just issued his
recommendations are not accurate unless he lied to me in
September. He also told me at that time that the stock was
going to go down. He told me that he shorted that stock at
$5.00. He said that sentiment in Venezuela was totally against
KRY and pro PDG. This is not hearsay, this is what he told me
directly.
In his releases, he states that his firm is a bank. We are unable
to locate any charter showing Asensio & Co. is registered
anywhere as a bank. We have been able to determine that they
are registered with the NASD. We have requested a copy of
any complaints/diclosure information from the NASD. The
NASD has disclosed to us that their is some disclosure
information related to the company which they will be sending,
but it will not arrive until likely Monday.
To some of us that have done our homework, the fact that
ownership of the property is with an entity controlled by the
directors is not new information, though obviously, Asensio
figures that it is important to publicize facts which have
already been public information. The fact that Mael agreed not
to publish the previous agreements it had with CVG, is also
not new.
You may copy this and use my name if you wish.
Respectfully,
Kenneth M. Holeski
Portfolio Manager/NewCap Contrarian Fund |
