Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Hank who wrote (8199)	8/1/2001 5:53:48 PM
From: BinkY2K	Respond to of 10293

Hank, shorting levels in many stocks can have other sources. I understand your points. I do note that some shorting in stocks happens for reasons other than shorting and hoping it will drop. I gather some people with options or warrants in a stock can try to lock things in by going short now and protecting if the stock drops since they can assume the shares later and cancel. Let me address your other point. A stock that will do major things in days or weeks can prove itself in the marketplace. But, once a stock drops a lot, it does not always bounce back real well. Look at NTOP recently. I am not arguing the merits of the stock but noting that it dropped from the 8-10 range to the low 4 range and was below 4 at times. It does not seem able to recover. In my opinion, the main problem (besides their SILENCE for too long) is that several large corporations (Yahoo and SoftBank) dumped their shares too quickly at a time when buyers are not looking at telecom stocks. So, arguably, the stock is too cheap. But, it is not bouncing back on no news either. Even on some news, I see no great reason for it to move up much. $5 maybe. $6 tops. So, some companies may resist being knocked down in the first place. If a lawsuit helps, why not. And, as I mention, shareholders often demand the company do SOMETHING because a sufficient drop may hurt them financially and many get killed by margin problems. So, sitting back and waiting out an attack is a luxury some can not afford. On a possibly related topic, I hear SPRINT is making a secondary offering in something and saying Hedge Funds will be EXCLUDED. The reason amazes me. It seems that if a stock is trading at $60, the secondary will often be priced lower, say $55. If a hedge fund expects to get 100K shares, they may go short 100K shares now and use what they buy to cover. Of course, if enough of this is done, the price dips to $57 and the secondary may be done at $52. The hedge fund clears the short in a few weeks and makes money with minimal risk. Clearly, it is not in the interests of a company to be be shorted this way, especially if they end up collecting less for the shares. They would like longer term shareholders to buy and hold and keep the stock price up. The way I see it, there are many parties on Wall Street who are the biological equivalent of tapeworms, bacteria and vultures. An ecosystem may need some of that but the organisms that survive tend to be the ones that can shake them off best and then be attacked by newer mutations. This strikes me as aa simple example. Make it legal for bankers selling such shares to demand in writing a guarantee that the buyer is not short any shares and will not be before the transaction and perhaps will hold the shares for N days after. I have participated in IPO's where I was required to hold for 30 days, for example. To put teeth into it, larger clients would be spot audited and any violations would require, at a minimum, loss of the entire amount invested with proceeds going to the company or the bankers. LOL!