IFLY MUST READ, off the yahoo thread
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The Dynamics Behind the Move
simarx
Jun 18 1998
8:51PM EDT
There is a huge short position on IFLY. The short position cannot be held by individual investors, but by some
insiders who are either arbitraging against the Warrants and/or sold the rights to their restricted stock to some
offshore company. The size of the position suggests that it is someone(s) who is holding a large chunk of IFLY
from the IPO, but those stocks are restricted, so they have to play some sophisticated game, which means we
have a professional shorting.
There is a 30 day limit to how long a broker/dealer can hold a short position, but there is a way around this.
The BD simply sells his short position to another BD on a handshake that they will get it back later. Thus the 30
day limit is circumvented. If you take a look at the number of firms holding a position (you can find this on the
Nasdaq site) it becomes clear that there are many BD's holding long positions for their clients in this stock.
What does this mean, there are fewer BD's inclined to hold the short position for another 30 days, forcing the
short to cover. This coupled with the current run-up makes it harder for the pro to pass the short on to another
BD (We are talking about a significant bleeding today.)
The key right now to create a good squeeze is not to sell, no matter how tempting. If you feel confident that
good news is coming soon, stick to your guns, this is war. The pro on the other side is injured and you can sure
bet he will come out fighting tomorrow. He may sell into buys creating artificial weight hoping the demand
wears out. Look at the big picture and the potential upside to keep the squeeze going. There is a lot of money
for longs and it will continue to grow as the short is forced to cover, very little stock for sale out there. If a big
block opens up for sale, it will probably be the short trying to scare you. Remember, we are talking a potential
7 digit loss for some pro, he will fight hard tommorrow.
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