TraderGreg--
Forgive me for disturbing the sleep of a long-dormant thread, but I am observing a situation in a stock I hold that relates to the theme of this thread, and I am hoping you, or somebody else, can shed some light on the possible course of action
I hold what is, for me, a major position in HeartSoft (HTSF). This is a stock with six million shares outstanding, two million in the float, and was largely a downbound, moribund issue until two weeks ago.
Since that time, the stock, which used to trade 20,000 on a busy day, has traded roughly 1.6 million shares, with the ratio of buys to sells being about 60/40.
Before that, the buy/sell ration was often 10/1, without much appreciable movement in the stock.
It seems apparent now, that the MM's themselves are very short on the stock, perhaps to the tune of a million shares. This figure was reached by observing the buy/sell ratios of the past six months, and is just a rough estimate....it might be 800,000 shares, it may be 1.2m shares.
I am part of a group of shareholders that owns just over 25% of the float. We are holding long, so the real size of the float is 1.4m or so, or even less, as there are other shareholders out there with declared long positions.
I understand that market makers do not care to follow the fundamentals of the stocks they trade in...the MM's in HTSF may not even know what a spot they are in.
My question is, can market makers hold a stock down in an effort to cover their shorts? Also, are market makers borrowing my shares from my cash accounts to cover their shorts? Would a certificate call squeeze the market makers into covering, and is it wise to tweak the MM's noses in a small stock?
Here is the closing Level II log for HTSF on Friday. I can't get a hint of what the MM's are up to except they really don't want to sell anybody the stock, and if somebody sells to them, they don't want to pay much for it.
Bid Ask Bid x Ask Date Time Indicators
________ ________ ___________ ________ ________ __________ __________
PGON 0.750 1.000 25 x 25 01/29/99 15:58:47 F
BACH 0.730 0.930 25 x 25 01/29/99 15:57:37 F
WIEN 0.730 0.870 25 x 25 01/29/99 15:31:25 F
NITE 0.720 0.870 25 x 25 01/29/99 15:06:52 F
SHRP 0.720 0.880 25 x 25 01/29/99 15:06:46 F
MHMY 0.720 0.975 25 x 25 01/29/99 15:06:07 F
HRZG 0.700 0.900 25 x 25 01/29/99 15:02:16 F
USCT 0.720 0.920 25 x 25 01/29/99 14:47:20 F
FAHN 0.680 0.880 25 x 25 01/29/99 13:54:01 F
FRAN 0.375 1.500 50 x 5 01/29/99 07:40:05 F
GVRC 0.510 1.250 25 x 5 01/29/99 07:40:05 F
HILL 0.500 1.063 50 x 5 01/29/99 07:40:05 F
MASH 0.375 0.750 50 x 25 05/09/98 11:50:26 F
I guess what I am asking, what is the best course of action for a person holding a stock when it is the market makers that are shorting the stock?
Thanks!
Rick Williams |
