To: Ibexx who wrote (1622 ) 4/26/1998 3:06:00 AM From: D.J.Smyth Read Replies (1) | Respond to
Also, of curious nature is the possibility (i've heard) that hedge fund managers will mouth one position in the press while taking an opposite leading position with the fund. A practice would be to herald the woes, per se, of certain falling stocks that short sellers have driven to low levels while claiming the great potential of these companies that lies "just ahead." one hoped result would be that large inexperienced margin players take the hook, jump in at the low, helping create further marginable/shortable shares. after an initial, albeit slight boost from the positive comments, the stock continues its slide - thus serving the hedge fund purpose. you can make more money on the short side on a stock selling at higher levels with increased expectations than a stock selling at lower levels with diminished expectations (it's hard to short/borrow such stocks anyway). Once the issue has hit the new lower price support and complete hope has vanquished - wa la - just as the hedge manager originally predicted, the stock rises from the ashes (not always, of course). and, of course, they're out on the short side, and have now gone long. who knows, this could be what is being done with VVUS. you can make more from a dog at $13 and falling than from a dog at $8 and falling (not to say that Muse is a dog - but there is logic in everything - i.e., Satan's half-trust spoken to Eve "...if you eat, you'll be like God, knowing Good and Evil", as opposed to knowing only the good that Eve had only understood up to that point. some things are not worth knowing.
