Adanac Molybdenum Corporation AUAYF

RE: RE: RE: Market misunderstands reorg

[AIGswap]

The downward pressure was not shorts.  If the stock was available to short - I would have shorted it.  Before the stock split, many brokers don't let you short a
.06 stock nor would they be able to find the borrow.  The newly issued shares also won't be shortable for about a month or two (as is the case for new issues).

Also, in Canada there is the up-tick rule, which prevents short sellers from beating down the stock if borrow was actually available.

The drop in price was due to the fact that the shares were massively overvalued.  At a post-split price of $9.00, the $260 million enterprise value implied that creditors were paid over $1.50 on the dollar for their claims (which makes absolutely no sense in a bankruptcy due to insolvency).  This was a company that went bankrupt because the assets were worth less than its debt.

The lenders and trade creditors who now own the company have no interest in owning stock - they just want cash.  If you were a former employer or consultant would you want your paycheque in stock?  That's where the selling is coming from.  These guys want liquidity.  However only 1.5 million shares have traded, which means the selling is only about 6% done and i expect the stock to go down another 50%...

Bottom line, if you were long this stock you should have sold it last week/month/year and if you didn't read the documents then it's your own fault for losing money.  You have to be willing to do the work.  This proves to me how inefficient the market is and how irrational some investors are.

This company is worth something.  Is it worth $260 million  - clearly not.  Is it worth $26 million? Maybe.  I think this becomes a value stock I'd be interested in researching further once it hits around $1 per share.