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To: Jacob Snyder who wrote (11341)	7/18/2011 10:49:44 PM
From: Jacob Snyder	Respond to of 16955

Sunpower: SPWRA – The Slam Dunk Market Inefficiency Trade You Can’t Do Sunpower has two classes of stock: $SPWRA and $SPWRB. Later this year, they are planning to collapse the two classes into a single class of stock. That means that both share classes should trade right around the same price. There’s just one problem: they’re not. Not even close. SPWRA is trading at a huge premium to the “B” shares – but there’s no borrow available: you can’t short the A’s and buy the B’s and hope to profit. In fact, I think that what’s going on here is a vicious short squeeze that is distorting the price of the A shares. Several weeks ago, Sunpower completed a tender offer where Total corp bought 60% of both the SPWRA and SPWRB shares. As one might imagine, this has reduced the availability of “borrow” in the “A” shares (although there is still borrow available in the B shares). In order to short stock, one must first borrow it, and if you can’t borrow it then you can’t short it. Furthermore, if you have borrowed shares and the lender wants their shares back, you have to either a) borrow shares from someone else or b) go out into the market and cover your position. It looks to me like this SPWRA rally is a result of a massive short squeeze caused by borrow shortages in the wake of Total’s tender- after all, Total absorbed 60% of the existing stock, massively reducing the supply of shares available for stock lending. kiddynamitesworld.com my comment: this is starting to make sense.