Aggressive Short Covering UNTIL June 9thHello Everyone,
I expect aggressive short covering from now until June 9th, 2011 (Maximum pain date). Let me explain.
As you know the regulators are questionning LFD. For certain, regulators are looking at the trades.
On June 9th, 2011 shareholders get to vote at the annual shareholders meeting. There is one (1) per shareholder.
Presently there are 144 million shares outstanding so 144 million votes.
The persons whom purchased shares sold by a naked short does not know this so they will vote their shares along with shareholders whom purchased their position from a selling long.
In the past, naked short selling was caught by both the company and regulators at the time of the shareholders meeting where shareholders get to vote.
I will not name this other company but it had 80 million shares o/s and, a published short position with the regulators of 5 million. At the shareholder meeting there was 140 million shares voted, hence regulators picked on the additional 55 million shares that were illegally shorted. Before this, it was impossible to know.
LFD has scheduled a shareholder meeting on June 9, 2011, if there are not any illegal shorts then shares voted should equal 144 million shares outstanding. However if shares voted are closer to 200 million then, regulators and company will seize on this.
For this reason, I expect that DEMAND will strongly outstrip SUPPLY from now to June 9th, 2011, the MAXIMUM PAIN date for illegal shorts. How high will we go on stock price, I don't know, but a ride like VST would be a relief.
I would not expect any illegal short to be on record as of June 9th, 2011, so they do have a chance to cover without regulatory noticing it. There are severe consequences for those whom aer illegally short.
For longs, it is in your interest to understand this so that you are in no rush to sell. Let the demand hit your supply order at a price you want. There is really no rush to sell under these circumstances.
I would expect financing to be announced only after June 9th, 2011.
I believe company was upset with naked short selling and the only way to correct this was to withdraw from financing and force short naked covering by June 9th, 2011 date to which all shareholders vote. The withdrawal seems to be perfectly timed by management. Probably a little help from SOROS on how to get the most out of it.
Going with other financing proposals removes the possibility of manipulation by those concerned.
Have a good weekend,
Just my honest opinion of course,