Print

[hulkster]

So I assume that the SHO list is implying that the MMs sold 900K shares that they did not own, but that they promised to deliver at some future date, thereby making the trade a legal short trade.  And at some point down the line if they fail to deliver, it will be classified as an ILLEGAL NAKED short trade or a FTD (failure to deliver).  Is that your understanding too?  TIA

Yeap! that's my understanding also.

[roundmot]

Normally the boards are not very good sources of accurate info on such topics, but with Doc here, it would be great if we could get the answers from him.  No one knows more about the subject, that is for sure.

Doc, are you having any of this?  You could charge us a fee or something.  :-)

[Mike Gold]

MM's and shorting:

"For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board, as there may be few shares available to purchase or borrow at a given time."

[roundmot]

MM's and shorting:

"For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board, as there may be few shares available to purchase or borrow at a given time."

Unusually concise statement on the subject.  Where did you find it?  TIA

[Mike Gold]

MM's and shorting:

"For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board, as there may be few shares available to purchase or borrow at a given time."

Unusually concise statement on the subject.  Where did you find it?  TIA

SEC website.

[JJ_Rocks]

For awhile the daily short positions continue to accumulate until they become too big to not be noticed.  That is when they are bundled together and borrowed.  They can be borrowed from the DTCC borrowing program which coordinates matching lenders and borrowers.  The flaw with the DTCC program is you may think they are lending virgin shares - but they probably have been lent multiple times before and will again by your broker when they are in your account - same shares.

Or the MM/Hedge Fund can keep the short position totally out of the system with a side agreement with a buddy - you scratch my back on MDMN/Cerro  and I'll scratch your back on your little short problems.  The MM/Hedge fund's buddy probably doesn't have the stock to lend - but if he says he does and makes the commitment to come up with the stock if needed - it counts.  All of that happens off the exchange (ex-clearing) and it is where you can build up the big toxic barrels of crap that nobody knows about (think Refco).   

[geoly37]

Forget Monk.  Send info to Matt Taibbi c/o Rolling Stone and turn him lose on the short situation. There's years of material for him to work with, and I bet Dr. D has a direct line to Matt. The Huffington post follows Matt's articles.  It's hard for the sec to look the other way.  He's raw and blunt and to the point.  Now tell me wouldn't it get interesting to see a few of the market makers head for cover and not the Rolling Stone's cover!~
Peter
Matt and I have a very similar writing style (notttt!)  I write that Lehman Brothers has been misbehaving in the naked short selling world once again using their signature credit default swaps ruse.  Matt writes: that horses a@@ Dick Fuld is the biggest @@@hole on the planet and as for Goldman Sachs and that ----sucker Lloyd Blankfein.....Matt gets fame and fortune and has made a bunch of covers of the Rolling Stone and I can't get my own pastor to put my work in the church bulletin!  Talking about "getting no respect"!

ouch

[peter]

Hey Doc,
Matt ends up on the front pages because his language is "raw", offensive, to the point and easy to understand.  You tend to be far more technical.  Maybe you both can team up using mdmn as a front page poster boy example and nail these parasites for us once and for all.
Naked shorting at our level is blatant corporate piracy against smaller companies.  This is much easier to unwrap and document than the sale of derivatives with side bets (AIG) to countries around the world but the effect/goal is similar. Bankrupt the company (or country).
Doc. P.M. me with his direct line and I'll call him.
Peter

[brecciaboy]

I've got a limited amount of time to review the basics of NSS.  To show you how far behind schedule I am I just spent 8 days locked in a hotel room in an attempt to condense book #9 from 160 pages to 140 pages.  I come back and it's now 182 pages and 92,000 words.  So much for my efforts. 

In re: to Medinah's shorting, there are 2 main sources for the borrowing of shares to effect a legal "pre-borrow" associated with a legal short sale.  They are institutional shareholders and margin account shares.  Medinah has pretty much zero shares in either location.  All of Medinah's daily short selling is illegal "abusive naked short selling" or "ANSS".  Contrary to the financial media not all "naked short selling" is illegal.  A "bona fide" MM can legally naked short sell shares into markets characterized by an excess of buy orders dwarfing sell orders.  He accesses this thing called a bona fide MM exemption from effecting "pre-borrows" or "locates".  In order to legally access this exemption you need to cover your naked short position on the very next downtick in share prices.  Nobody covers though.  Why?  Because it costs money to cover and due to corruption on Wall Street you can gain access to the funds of investors even if you sell shares that don't exist and never deliver that which you sell.  These crooks never, never, never cover preexisting naked short positions until forced to.  Aggregate levels of prexeisting naked short positions go constantly upwards because of this.  There comes a point in which the naked short position can't be covered without risking financial collapse.  Why?  Because the first thing you do when you cover is stop your daily naked "maintenance" short selling.  If you've been pretty much the only seller in the market for years then the share price will gap upwards just from stopping the maintenance short selling.  Remember these "open short positions" are collateralized with cash.  The crooks need to naked short sell all day long just to keep their cash collateralization requirements in check.  If these guys had to cover an astronomically large naked short position that has been building over 12 years in a market that is already gapping upwards then it could be financially cataclysmic both from the expenses of buying as well as meeting higher collateralization requirements for the uncovered balance.  The crooked MMs will win 98 of 100 battles.  The 2 they lose will sting financially but will easily be covered by the 98 victories.

[JJ_Rocks]

I knew we could draw you out - Thanks.

[joelotw]

Thanks Doc. I hope we're that 2 percent.

[JJ_Rocks]

By Garry White
March 10 (Telegraph) -- "Chile-based copper miner Antofagasta saw profits fall 45pc in 2009 as copper prices recovered only slowly from the lows seen during the credit crisis. However, the company was upbeat on medium-term prospects for the copper market, which it expects to move into deficit from 2011. In the year to December 31, Antofagasta's revenues slid 12pc to $2.9bn (£1.93bn). Pre-tax profits fell to $1.4bn from $2.6bn after the average copper price in 2009 fell 25.7pc to $2.34 per pound. Results were boosted by strong gains in the copper price in the second half of the year. Metals producers slashed output last year last year after commodity prices plunged in the final quarter of 2008. Antofagasta produced 442,500 tonnes of copper, down from 477,700 tonnes in 2008, although this was ahead of expectations. The company plans to increase production in the current year by 23pc to 543,000 tonnes through expansion at its largest mine Los Pelambres, with output rising to 700,000 tonnes in 2011 after its Esperanza project comes on stream.  The company said last month's earthquake in Chile should not impact its production targets. "The recent earthquake near Concepcion is not expected to have any material effect on our operations," said Marcelo Awad, chief executive. The full-year ordinary dividend was raised by 4.4pc to 9.4 cents and the final special dividend payment was 14 cents a share. The final payment of 23.4c will be made on June 10. In 2008, the group paid a total dividend of 60 cents after it made an exceptional gain. Michael Rawlinson, an analyst at broker Liberum Capital, said the dividend payout was something of a let down. The low payout will disappoint the bulls, and raise questions about what next. We think that there could be an acquisition in the pipeline," Mr Rawlinson said. The company has a strong balance sheet, with $1.6bn in cash at the end of the period. Analysts expect this to rise to $2.6bn at the end of 2010. The expansion projects are fully funded after the group raised $1.8bn in two major financings. Esperanza signed a 12-year $1.05bn project financing facility in May last year, Los Pelambres entered into new corporate loan facilities for a total of $750m. The shares fell 8p to 986p in afternoon trade"

[TradinonUp]

Of the 2,123,727 shares traded yesterday...1,690,057 were shorted representing nearly 80% of the total volume. 

Are the MM's out of real shares-you think? 

Of the 1,051,814 shares traded yesterday..900,015 were shorted representing 85% of the total volume.

I plan on following these numbers closely between now and when the JV is announced..and shortly thereafter.

We have firm numbers now..there is no longer a reason to speculate about the magnitude of the shorting that is going on. It's huge.  I'm becoming increasingly confident that the short side of the equation is going to produce the kind of share prices values that we have up till now-have only dreamed of.

Now, just got to get Juan to sign the freaking JV or for Greg to bring back an buyout offer in hand...and then we are GOLDEN!

Mike, you will need to reconfirm where you are getting your info.  Out of the 1,051,854 shares sold yesterday, I personally purchased 570,000.  I was the last 3 trades of the day. I did review it on Ihub and it showed mine as long as well. 

TUP

[Mike Gold]

Of the 2,123,727 shares traded yesterday...1,690,057 were shorted representing nearly 80% of the total volume. 

Are the MM's out of real shares-you think? 

Of the 1,051,814 shares traded yesterday..900,015 were shorted representing 85% of the total volume.

I plan on following these numbers closely between now and when the JV is announced..and shortly thereafter.

We have firm numbers now..there is no longer a reason to speculate about the magnitude of the shorting that is going on. It's huge.  I'm becoming increasingly confident that the short side of the equation is going to produce the kind of share prices values that we have up till now-have only dreamed of.

Now, just got to get Juan to sign the freaking JV or for Greg to bring back an buyout offer in hand...and then we are GOLDEN!

Mike, you will need to reconfirm where you are getting your info.  Out of the 1,051,854 shares sold yesterday, I personally purchased 570,000.  I was the last 3 trades of the day. I did review it on Ihub and it showed mine as long as well. 

TUP

My info is from here: http://www.finra.org/  Very rock solid.

My question to you is..did you really purchase anything? (Or did your broker's MM's sell you snake oil?) Having electronic entries in your brokerage account isn't the same thing as purchasing shares.

[Huard]

What mike means is they are selling electronic shares that do not have a certificate to back the stock,basically they are selling air to people,the only way we would know if they sold us something real is by asking for delivery of share certs.So buy all you can sold short because thats why we are able to buy so many cheap,this will change once deal is in play.