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.

Strategies & Market Trends : Playing the QQQQ with Terry and friends. -- Ignore unavailable to you. Want to Upgrade?

To: Kevin who wrote (486)	5/31/2005 9:49:53 PM
From: Walkingshadow	Respond to of 4814

Thanks much. It strikes me that somebody could start up a fund... even a mutual fund... that engages in just this sort of thing. You would not have to directly use the strategy, just follow the tracks of others and draft. So this could in theory be done with quite minimal capital rather successfully. T

To: Kevin who wrote (486)	6/2/2005 10:34:30 PM
From: Walkingshadow	Read Replies (1) \| Respond to of 4814

Hi Kevin, Here's something you might be able to shed some light on. We've been kicking AAPL around lately. I have a pretty good sized position from last year, and finally bailed yesterday morning. Message 21379013 Then I did some checking. I just couldn't figure out why a company with such stellar performance was imploding, and I smelled a rat. Here's what I found, but I don't understand yet what's going on. The top 10 institutional holders in AAPL are (in order): ==================================== 1. Fidelity Management & Research Corp: 42.2M shares, 5.2% of the float 2. Jennison Associates LLC: 41.7M shares, 5.1% of the float 3. Barclays Bank Plc: 40.4M shares, 5.0% of the float 4. Stewart (W.P.) & Company, Ltd: 29.5M shares, 3.6% of the float 5. State Street Corporation: 21.7M shares, 2.7% of the float 6. Axa: 19.2M shares, 2.3% of the float 7. The Vanguard Group, Inc.: 18.4M shares, 2.3% of the float 8. Calamos Advisors LLC: 18.3M shares, 2.2% of the float 9. Credit Suisse First Boston Corporation: 18.3M shares, 2.2% of the float 10. Waddell & Reed Financial Inc.: 15.4M shares, 1.9% of the float ===================================== The ones in bold are either hedge funds, or I suspect they are. The investment banks, well God only knows who they are dealing with, but I suspect they are not managing accounts for the Little Sisters of the Poor (but that would be a pretty intriguing name for a new HF, huh?). The total of these 10 is 265.1M shares, or 32.5% of the float. The total of just the ones in bold is 124.1M shares, or 15.1% of the float. By contrast, the top 10 mutual fund holders account for only 81.7M shares, or 10% of the float. So the above 10 have backed the mutual funds into a very distressing corner, seems to me. The MF managers must be perspiring profusely. Short interest amounts to only 3.1% of the float, and declined by 14.2% from April to March. Total shares held short now amounts to 25.4M shares, or roughly 1 day's trading volume (3 month average volume is 26M shares). There seems to be substantial insider selling over the last 6 months at least, and a significant proportion of this was not planned sales or options exercises. In contrast, I could find little evidence of insider buying. So the question is this: If these in bold above (and maybe some of the others) are hedge funds or their representatives, and they have acquired such big positions in AAPL, what might they be doing? I can only assume one or more of them is actively pushing this stock down for some reason, and maybe that's the reason they acquired so much inventory---not as a long position hoping the stock will go up, but rather to allow them to put out some size and walk down the inside ask at strategic junctures during routine trading, maybe flashing some REALLY big lots briefly just as a scare tactic. That is, to drive profits in a short position that they've taken up in ways other than by directly shorting the underlying (although maybe they are doing that also to a limited extent). That is, maybe by buying tons of puts and/or selling covered and/or uncovered calls, then dumping inventory so the puts profit and their inventory doesn't get called away and they don't get squeezed. Then.... just for good measure, trot out a couple of AAPL-bashing analysts who issue grave misgivings in the face of yet another superb earnings performance. Next, once the strategy unravels AAPL stock price, cover the short positions, accumulate quietly, then turn and buy aggressively long with size to get things moving back up, and trot out the same analysts with gushing praise for AAPL and their established track record of earnings and revenue growth. I suppose there are a number of other scenarios that might be unfolding, but what is your take? What do you think is going on, and why? TIA, T