I have been a lurker here for sometime now and an avid AMZN options trader...mostly shorting the exorbitant premium and trading around it. I have read the past 500+ posts and want to add a few points; 1) It is absolutely true that brokerage/clearing firms are conducting buy-ins for naked shorts three time a day..opening...1pm EST...and shortly before the close..as most all new shorts are being denied the opportunity to safely borrow the stock; 2) The opportunistic day-traders and momentum-driven mutual funds and most pure technicians have been aggressive buyers up until the past two days. These players are not price-sensitive and always exaggerate any up move with their computer-driven techniques. (They...the mo-funds...also get scorched at the turn in the stock and are equally non-price sensitive on the way down.);3) NONE of this past up move was fundamental by any stretch of the imagination as most internet-specific mutual funds have not seen it prudent to add to their holdings north of par (100); 4) Most interestingly, this stock, and YHOO and AOL comprise three out-of-four of the largest holdings for Jeff Vinik's hedge fund's equity portfolio. Vinik is well-known as a determined short-squeezer among the cogniscenti of Wall Street. His past failures (equity-type) at FIDO were short-squeezes and momentum plays that blew-up and left Magellan holding the bag. He is cunning and savvy with thin-float, high-short interest BIG-Name issues. He shifts his stock back and forth between cash and margin accounts at different houses and then coordinates a return of the stock to a cash account effectively calling stock back from any borrowers with a determined large-print buy order program. He'll ask the broker (and there are many who will work to accomodate this) to buy the stock sloppy with 2000, 3000, and 5000shr. bids up to a certain price point and then cancel his working balances once the daily squeeze patterns develop. I have spoken with several hedge-fund brokers/traders at a few houses that confirm they have "working orders to buy sloppily" but will not reveal the client. They tell me, and our hedge-fund traders, to back off this name on the short-side as it will obviously work higher....even the brokers don't like to burn their better clients. I believe, but cannot 100% confirm, that Vinik is not above calling certain cronies and letting them know he is a "working" buyer of AMZN and YHOO inorder to magnify the up-moves. He will also, periodically, employ a tactic known as "driving to the point" where the stock is bought up into a larger sale order that has been broken up, effectively forcing the squeezed shorts
into buying the stock from him at a higher price. This tactic is fairly sleazy and many firms don't like to be involved. This type of trading, I believe, was DIRECTLY responsible for the majority of AMZN's recent run-up from 80-to-120...as it ended, conviently at the end of the the 3rd Qtr......payout time for the partership.
Don't be fooled into thinking that the regulators will catch on to this game of his. Vinik, et.al have been doing this for quite some time and masks it as well as can be. They break up the orders well and spread it out onto the street. This is a profitable game for everyone but the shorts....and the SEC, et.al. don't spend much time looking out for their interests...do they? Vinik is no rocket-scientist and was not any great money-manager @FIDO....yet his fund remains solidly up for the year-to-date and is pre-dominately a long-side fund....another severe anomaly in this year's market. I do not spell this out for any personal gain...as I am often net-short this stock...but instead to helpfully educate all as to the games that are played with this issue. Also, don't think for a second that Bezos doesn't know how this works....he does...(from his days @DE Shaw) and he knows it is in his best interest to let it continue as long as the market will permit it. (Why do you think DE Shaw, et.al are as secretive as they are???). All the options-related influence and analysts jabberring are chicken-s..t in this stock (although the options pins effectively make it difficult for the boys to work those last two days of any cycle)
If you don't believe me....go back over the last eight months and examine the trading patterns and correlate that with the quarter-ends.....Vinik's fund has been a large holder for quite sometime and his short-box management has been intact for an equal period of time.
I wish everyone on this thread good luck, especially those able to wait-out all the squeeze crap on this fluffed-up stock.
Steve |
