Any old-timers still out there? See if this excerpt from Jim Cramer's weekend article on TheStreet.com rings a bell:
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(Okay, now let's role-play the National Gift trade the
way a bad guy on my team would do it, and the way
a burned broker would handle it. We will let the
Bizarro Mark Kantor negotiate it, with Bizarro Ben
on the other end of the line. First I turn to Mark and
say, "Man, National Gift, gotta get me out." B.M.
says, "We have 500,000 shares, can't open up. Gotta
hide that. I'll tell 'em 50,000 shares. We'll fool 'em."
He then calls B.B. the broker on the other end of the
trade and says, "Hey Ben, got a little National Gift I
want to sell. Can you help? Will you buy it from
me?" Ben says "anything I should know? Like is
there more behind it?"
Mark says, "Nah, great stock. Just got this 50,000 I
want off my sheets, to get rid of the position." Ben
then says, "Okay, I will buy it from you in-line, 25
bid." Mark says "sold." Then Mark comes back an
hour later and says, "I have another 50,000 to go of
that National Gift." Hmmm, Ben thinks to himself. "I
hate these guys. They never open up. They are
always baggin' me. Time to teach them a lesson."
He can call up my holdings on his computer screen
and see that recently I owned 500,000 shares. All
traders have this info as holdings lists are updated
periodically by the SEC and compiled and given to
traders by their firm.
Ben then starts leaning on the stock. If he is a really
bad guy, he calls his buddies and urges them to "get
short National Gift because there is a piece around,"
or, if they own it, "blow it out now and you can buy
it back cheaper I know there is a big piece for sale
around." The stock then gets knocked down,
probably to the 21 level, right before my very eyes,
as long sellers sell it "in front of me" and
short-sellers work their magic of getting someone to
pay them a plus tick, or a price higher than the last
sale.
When you see this stuff happen -- and it happens
every day -- you can tell that word is out of a big
seller and soon every rock creature on the planet is
shooting against him. Next thing you know, as I am
twisting in the wind, Ben picks up the line and says
to Mark, "Lots of sellers in this one. Looking bad. I
will pay you 21 for it."
By not opening up at the get-go, but instead trying to
rip off Ben, I have created a massive and powerful
enemy. Now the broker has exacted his revenge by
making the stock even weaker than I would have if I
had simply told him my whole picture and not been
so greedy. As I am now not able to take any more
pain, I capitulate three points lower than I might
have gotten had I played by the rules. I capitulate
and sell him 450,000 at 21. Then he and his buddies
all "cover" on the "print," or buy my stock at 21
when I puke it up. They make money, I lose a lot of
money.)
...
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Boy, does that bring back painful memories or what? Anyone else think that the VC blocks were moved by a "bad guy" broker?
Chip |
