RE: Excellent insight CalifdreamingThinking about the strange trading/shorting a bit more, the warrant holders are likely exercising their
.75 warrants and using those shares to cover their shorts.
That said, still doesn't explain why anyone would short 8% of the company when odds were very high based on log results that the well would be an exploration success. Nor does it explain the extremely suspicious timing of those shorts - laid on at the exact time that insiders knew that the lower zones weren't commercial. The timing smells to high heaven...
If you were a warrant holder at the time the shorts were laid on, there was no reason to short - your risk was zero and your upside unlimited if the well was a success. I could understand shorting for risk management reasons if the share price was above the exercise price and warrant holders wanted to lock in their gains if the well wasn't a success. But that wasn't the case as the share price was ~40-50% lower than the exercise price when the shorts were placed.
As for QEI, I have to respectfully disagree. There are vast amounts (260MM of them) of ~
.20 warrants that have to be chewed thru for the shares to move. Pretty safe to figure that you can sell into every bit of strength for the foreseeable future above
.20 and rebuy as the warrant holders sell to raise cash to exercise the warrants and push it back to
.20 again.
BWN has a fair number of warrants to chew thru as well (11MM at
.75 and ~9MM at
.95), but I suspect many have already been exercised - the shorts are likely exercising to cover as it is cheaper than buying in the open market. As a percentage of outstanding shares, BWN has significantly fewer warrants than does QEI. As such, BWN has better leverage and upside potential.