Hello everyone. I'm new to the thread. Took a token position in LONE after the bankruptcy petition against them was dismissed at $.13 and am waiting for the "all clear" before possibly adding to it in a serious way. I have a few thoughts in response to recent posts:
My understanding is that MM's widen the spread oftentimes when they want to discourage trading activity, in preparation for "walking" the price down on low volume to whatever target level they have in mind, usually with the intention of covering some short position they have taken at a very low price. When this occurs, it can be largely psychological warfare, depending on whether or not there is any fundamental substance to the company. In LONE's case, I think we all believe there is. With volume slowed to a trickle, the short MM will then narrow the bid to encourage sellers by creating the illusion that, because the bid/ask differential is better, the seller is receiving a fairer price. The MM will then supplement whatever sales volume this manipulative ploy induces as necessary to achieve the desired outcome. I believe that whoever pointed out that there is no buy side pressure to offset the selling pressure is quite right. Obviously the source of the selling pressure in the past is still quite active and can short with complete impunity because countervailing buy side pressure just isn't there and he knows it. The company can't promote itself or raise the money required for whatever acquisitions it has in mind until they are current in their financials. (The shorts must be well aware of this too.) Be strong, have faith. And whatever you do, don't give in to the shorts and sell your shares at a manipulated price, allowing the shorts to cover their positions with your former shares. Hope the financials are released sooner rather than later. There will be quite a lot of them, including not one but two 10-K's and six quarterly statements, if I'm not mistaken. Be prepared for this to drag on well into the summer. Until they are out, I expect the stock price to spike fleetingly on positive news reports and then return to near its previous level under the influence of the shorts. Yes, I believe a key to offsetting the shorts will be Huff's partnership. The company told me they believe the number of shares shorted against them to be in the range of several million. Suppose it's four mill., having a current market value of slightly less than a $1 mill. Any serious buying interest could squash the short, but until then he remains lord of this market. There will come a time when this company's story ought to be shared with the rest of SI. |
