BioAmber Inc. BIOAQ

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[Mrtkr1]

Ok Canadian traders, here’s some info on shorted shares since the switch to OTC:

1. Nearly 16 million shares have been shorted. Not really sure how many have covered. If I had to guess based on sp activity, I would say not me.
2. OTC rules didctate that for every share shorted, you MUST have $2.50 free in your margin. This means ~$40 million dollars are locked for a company with a market cap of $5.8 million. This is insane.
3. If the company went bankrupt today, these short would see additional profits of $1,000,000 max total. That means all their additional profits would amount to $1million

Should the stock continue to move up, the $2.50 free in margin, will be compromised and shorters will have two choices. Start to close so of their positions or dump additional cash into margin to be locked up. As volume decreases, it will become harder and harder to find shares to borrow to short. It will also become harder to cover short positions. Shorters have no real choice but to outbid other shorters and regular buyers to close positions.

Now remember there are large short positions from the NYSE days that are open. They are in the money big time. They won’t want to lose any of these profits and some of them will inevitably close their positions. Again remember no TSX so OTC is the only place to buy or sell. If these larger NYSE shorts start to close, you will see an accelerated move up. OTC shorters receive margin calls and they have to close. I am not talking about miracles. I am talking about the reality of shorting Bioa. There’s a point where it is no longer wise nor profitable to hold shorts. Have we reached that point? That’s for each investor to decide. However, if you are a long or day trader, it’s worth noting that selling cheap hurts others but more importantly hurts your own investment and speeds up additional loses.

Shorters of penny stocks are not average retail investors. They are hedge funds. They don’t kill a stock out of anger or malice. They do it because it’s profitable and will stop the moment it’s no longer profitable. Just like many other business, the fund managers have parameters they have to abide by.

hope this helps the average investor here. Happy long weekend

[Mrtkr1]

Just so ppl are aware, my numbers shorted shares are only for the OTC. They DO NOT include shorts in the NYSE nor TSX. The short number would be obviously much much larger with those included

[Stillconfused]

I'm confused as to how this shorting works.  Perhaps you could help me understand it better.  You say that 16 million shares have been shorted, but 95 million shares have traded on the US exchange since they announced the first financing on Feb 6 and another 60 million shares have traded on the Canadian exchange for a total of 155 million shares traded.  But the share capital

[Mrtkr1]

The same shares can be traded multiple times. Therefore the entire float quantity can be traded in a few days. Additionally, there can be naked shorts which technically have not been borrowed. As for the offering, your evaluation is incorrect as the price is based on the average of 5 days not just the last day. The warrants have excerize values also. I believe to total max count is 43 million