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  1. relmor2003 is offline
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    04-10-2009, 06:56 PM #11
    Quote Originally Posted by cos1000 View Post
    In addition, to answer your question as to when would I buy a put? I would buy a put or short the stock when I purchased the 2014, 7% Notes, as a qualified buyer, who would now also be in possession of a commensurate amount of lent shares for the purpose of shorting or executing a derivative action reflecting the same (a put).
    Thanks for your input. So my theory of 100 million SI was never possible. I assumed wrong that lent shares were not part of this. Ok, so the SI to me is kindof irrelevant then if under 300 million. I may have been told bad information a while ago about this, I thought I had asked someone on SA a while back. Thanks for clariying that for me. Those shorts dont worry me. With real news, improve balance sheet, and positive EBITA, they wont have enough control to keep it from reaching .80 cents to $1 area. Still leaves the who is this ISEG trader manipulation the stock right now as my biggest worry on that front.
    But I meant when would you buy a put against your holdings, vs. sell on the way up. At what point would you feel there was enough downside risk to justify this? Remember, I would be hedging, and looking to sell my shares lets say.... over $1.20 or so....Maybe shave at .80 cents, and protect the rest(not 100 percent hedged, as it would still be a long term investment), but I wanted something invested to prevent being underwater a long time on the remaining shares, lets say a protracted pullback to the .50-.70 cent range. Do you feel a .80 to .60 cent drop would cause the put to move enough to make it worth it to you? I think it would... The Jan 10 puts are interesting. You can grab one for maybe 1.70 and sell for 2.1 if this were to occur. Like I said, maybe 1/4 protection on a protracted drop, something to make sure you had some extra cash to average down with (free money).

  2. relmor2003 is offline
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    04-10-2009, 07:05 PM #12
    So cos, when premerger the short interest was over 180 million, there were no lent shares in that. Now its 181 million? With lent shares? Im confused. How can the current SI of 181 million include 260 million lent shares? Hence why I assumed they were not part of the report. I must be missing something here.
    Settlement Date Short Interest Avg Daily Share Volume Days To Cover
    3/13/2009 161,851,340 44,363,782 3.648276
    2/27/2009 170,953,171 95,029,025 1.798957
    2/13/2009 158,752,423 135,842,465 1.168651
    1/30/2009 271,931,355 24,670,596 11.022488
    1/15/2009 219,626,558 31,615,935 6.946705
    12/31/2008 214,743,765 42,616,416 5.038992
    12/15/2008 263,767,753 50,675,242 5.205062
    11/28/2008 263,151,674 59,719,895 4.406432
    11/14/2008 270,261,005 44,775,174 6.035957
    10/31/2008 285,208,034 60,911,430 4.682340
    10/15/2008 232,009,933 51,123,259 4.538246
    9/30/2008 199,000,884 67,567,166 2.945231
    9/15/2008 236,173,485 60,825,069 3.882831
    8/29/2008 231,922,321 51,278,943 4.522759
    8/15/2008 209,124,306 103,062,578 2.029100
    7/31/2008 310,672,182 77,266,333 4.020796
    7/15/2008 159,958,339 24,495,816 6.530027
    6/30/2008 153,867,872 47,566,762 3.234777
    6/13/2008 147,967,583 22,843,925 6.477327
    5/30/2008 141,279,132 21,755,071 6.494078
    5/15/2008 170,358,387 21,565,784 7.899476
    4/30/2008 188,876,005 25,314,233 7.461257
    4/15/2008 157,942,837 27,528,074 5.737519

    See the jump in July, when the lent shares came into effect. 159 to 310. Thats 150 million difference. Still not enough, unless a ton closed shorts before this, betting on the merger failing or whatever. So now its 190 million, so some of those bond shorts have closed their position(meaning they think they will survived, ultimately, and banked the .05 cent, or .10 cent, or .15 cent bottom. Now they keep their long, or turned their shares used to short into a long, or used the as a temparary cure for someones nake short interest problem, to worry about returning them for 5 years. Am I rambling here, or is this making sense to anyone?
    Last edited by relmor2003; 04-10-2009 at 07:10 PM.

  3. JohnnyIrishXM is offline
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    04-10-2009, 08:21 PM #13
    See the jump in July, when the lent shares came into effect. 159 to 310. Thats 150 million difference. Still not enough, unless a ton closed shorts before this, betting on the merger failing or whatever. So now its 190 million, so some of those bond shorts have closed their position(meaning they think they will survived, ultimately, and banked the .05 cent, or .10 cent, or .15 cent bottom. Now they keep their long, or turned their shares used to short into a long, or used the as a temparary cure for someones nake short interest problem, to worry about returning them for 5 years. Am I rambling here, or is this making sense to anyone?
    Relmor,would assume those lent shares were sold in the weeks after the merger and were bought back at .05 to .08 in feb with bk scare...would be long now,unless they have lent out half to short for a premium,that is what i would have done to maximize profit....JMHO

  4. RickF is offline
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    04-10-2009, 10:30 PM #14
    Quote Originally Posted by relmor2003 View Post
    Hopeful. The only thing globally keeping it under wraps is the fact we are still the global reserve currency. Im not saying hyperinflation happens overnight. But that bond money isnt going to sit in bonds at 1% interest forever. Its SITTING there, not cemented there. It will flow into dollar backed assets eventually. If the dollar losses reserve status, all dollars will find a home at that point, causing hyperinflation. Tons of overseas dollars that will come home. When they arrive, it will be too many dollars chasing an ever decreasing supply of goods. Inflation. Hyperinflation comes when things like this happen...
    1. No one but your own FED buys your treasuries.
    2. Interest rates stay low for a long period of time.
    3. Government goes into huge spending deficits.
    4. You have a trade inbalance.
    5. Your currency losses "sentimental favor" to other currencies, or asset backed classes in other currencies, for instance a new gold exchange where you cash out in Euros, or a global currency, etc...
    6. You lose reserve currency status.
    7. You keep adding credit to the system. Constantly.
    8. You grow M3.(fake money on a computer screen leveraged with real assets(remember most real assets are rebounding again.)
    FED balance sheet 10 years ago was made up of mostly short medium term treasuries. Now its filled with unsellable assets, purchased for a lot more than a private investor is willing to pay. When the private investor is willing to pay more, then begins a CHANCE to begin decreasing the money supply. The FED buys assets to incease the money supply(look at the FED balance sheet the last two years), and sells them to decrease the money supply. Problem is, when the FED buys something, no one else wants it.
    Relmor - man you guys are good! i have read this thread 5 times - I just gotta get back to school and this time - listen to the "piggybank 101" course!

    This thread is a real stretch for me but your comments here did catch my attention!
    About 1 1/2 years ago a relative of mine (wealthy dude) said "Cash everything in now" "sell all your real estate holdings" and go to cash --- We are in for a MAJOR meltdown! ...... that was about a year before the major crap happened!! He said that cash will be king and it will set you up for major wealth!!

    Now he is saying - very similar to what you are saying!! Add to that - and i am pasting this from his email to me!


    My prediction for the market is “When I say 20% more I mean the Dow Jones at about 5400 and the S&P at 610!! Save these figures to show me how wrong I can be.” On Mar. 26 they are DJIA 7924.56 & S&P 832.86 that is about a 68% drop in the Dow & 73% drop in the S&P!!

    Makes me wonder - he was bang on last time!!!

  5. cos1000 is offline
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    04-11-2009, 12:14 AM #15
    Quote Originally Posted by JohnnyIrishXM View Post
    Relmor,would assume those lent shares were sold in the weeks after the merger and were bought back at .05 to .08 in feb with bk scare...would be long now,unless they have lent out half to short for a premium,that is what i would have done to maximize profit....JMHO
    The Lent shares for shorting were actually broken up into two lots totaling around 263M shares, I think it was around 187M accompanying the sale of the 7% Notes, and 76M or so that would be lent to qualified buyers from time to time for the purpose of shorting.... The second lot was suppose to also include and agreement that for every share sold short that the sellers would attempt to take a one for one long or derivative long position (calls). The July 08 date is also blended with the Merger arbitrage that took place (long XM and Short Sirius), and probably exited at the time of the merger.

    The lent shares of Common Stock are exactly that Common Shares with no position until one is taken. It was assumed that when lent they would be shorted and cause the SP to go down, hence "the Ugly Deal". On Aug 1st, 08 these shares were authorized and began to be lent to assist in the sale of the XM 553M, 7% notes. Remember they were lent to assist in the Arbitrage Hedge by qualified buyers of the Notes because there were no XM shares outstanding as of Aug 1, 08 due to the merger, that could be used for the hedging action. Also, the notes were sold during August throu Sept 5th. It is during this time that the Lent Shares were shorted by the Buyers of the Notes as part of their Hedge Arbitrage. These Lent Shares, both lots, are always in the mix and at some percentage of their total are in the numbers for SI. It is not all Lent Shares Short or nothing.

    It is my understanding that the initial Hedge Positions (short) have long since been bought at lowere levels to lock in profits throughout the fall. The holders can take temporary long positions with them, sell them short again, transfer their use when selling some of the Bonds to other Dealer Brokers, who then will short the stock again. If you look at the SI since the merger, other than the July 31, 08 numbers of 310, which had both Sirius and Xm numbers in them, the Jan 30, 2009, Short Interest numbers reflect the full effect of those Lent shares back in the market as SI. This makes sense being when the BK fears were at their near highest levels. The Feb and March numbers bear this out as BK was off the table and the SI covered and many have stayed long.

    As I said before these shares will be with us until 2014 or ALL Notes are paid off. The shares do not come back as some of the notes are paid. They only come back to the company after All the Notes are paid off. These shares are available to dealer brokers, who represent customers who own the notes, or own the notes themselves for SP manipulation especially when the SP spikes quickly up as we have recently seen.. SP goes to .42 and we retrace quickly down to mid .20's and now stagnant at .34-.36. I expect this to happen on every sharp leg up, which is why I will play the "Pops and Drops" with them... JMVHO...
    Last edited by cos1000; 04-11-2009 at 12:20 AM.

  6. cos1000 is offline
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    04-11-2009, 12:28 AM #16
    Quote Originally Posted by relmor2003 View Post
    Thanks for your input. So my theory of 100 million SI was never possible. I assumed wrong that lent shares were not part of this. Ok, so the SI to me is kindof irrelevant then if under 300 million. I may have been told bad information a while ago about this, I thought I had asked someone on SA a while back. Thanks for clariying that for me. Those shorts dont worry me. With real news, improve balance sheet, and positive EBITA, they wont have enough control to keep it from reaching .80 cents to $1 area. Still leaves the who is this ISEG trader manipulation the stock right now as my biggest worry on that front.
    ---- but I wanted something invested to prevent being underwater a long time on the remaining shares, lets say a protracted pullback to the .50-.70 cent range. Do you feel a .80 to .60 cent drop would cause the put to move enough to make it worth it to you? I think it would... The Jan 10 puts are interesting. You can grab one for maybe 1.70 and sell for 2.1 if this were to occur. Like I said, maybe 1/4 protection on a protracted drop, something to make sure you had some extra cash to average down with (free money).
    I think that your strategy is sound from what I know about options, which admittedly I bow to your expertise here. I would in the future as the stock moves up on good news, think that this is the only way for the retail investor to hedge or "insure" their investment... especially with the Lent Short shares waiting to pounce on quick legs up.... Rather than risk guessing when they are going to take it down (meaning at what price) and selling your shares, buying the Puts keeps you in the hunt...

  7. JohnnyIrishXM is offline
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    04-11-2009, 01:25 AM #17
    Thanks Cos,that makes sense,didn't know about it being 2 lots.but it's safe to assume that 30 mil. or so have come back in short since we went to .42 on St.Pats day..Actually if you look at it my guess is that 50-60 % of the share vol. the last 8 trading days are probably shorts going back and forth.
    The institutional % was 56% on St.Pats and dropped to 49% after and has been fluctuating between 49%-just over 50% now,back and forth the last 2 weeks.
    Last edited by JohnnyIrishXM; 04-11-2009 at 01:28 AM.

  8. john is offline
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    04-11-2009, 07:33 AM #18
    relmor, I see cos1000 gave you a good answer to your short question. I will give the others a simple mans opinion. I dont know how many more times I have to say it. Time and time again we have seen NO short sqeeze, there is a reason for that. It is because the people holding the majority of the shares held short are investors in the debt to protect their investment. Just about the only short sqeeze we would see was as sl62 said when the proof of a bankruptcy came out, then they would be forced to cover or when the debt holders get their money back. Now while there are some shorts playing with the stock I dont believe enough to put it on the Reg Show List constantly. It is there because the company is a spec stock with a shit load of debt there by forcing investors in the debt to protect themselves by shorting the stock, there by creating a huge amount of shares short in the first place. I believe there are many investors in the shorts that are actually hoping the company makes it. That they are only HEDGING their bet. The proof is that there has not ever been a short sqeeze. How could you account for that except for the reason I just gave and the fact that there are just to many people willing to sell for less. Even with the last reason we would have seen major volume in trading the stock go up which we really have not seen yet when you look at the amount of shares held short the price of it and the amount of shares that are out. As many know I have said there will be no short sqeeze for the longest time. Follow common sense and you will see why there has not been so far and will not be in the future.

  9. cos1000 is offline
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    04-11-2009, 12:21 PM #19
    Quote Originally Posted by JohnnyIrishXM View Post
    Thanks Cos,that makes sense,didn't know about it being 2 lots.but it's safe to assume that 30 mil. or so have come back in short since we went to .42 on St.Pats day..Actually if you look at it my guess is that 50-60 % of the share vol. the last 8 trading days are probably shorts going back and forth.
    The institutional % was 56% on St.Pats and dropped to 49% after and has been fluctuating between 49%-just over 50% now,back and forth the last 2 weeks.
    I think we're on the same page with the current SI and it's effect at keeping the price where it is... I try not to write to much of what I think but, can't prove.... When volume is low these guys holding the lent shares make good money on .02 drops while they wait for positive News to cover, stay long, sell the up leg, and short the stock after it peaks again....

    A little history helps to figure out how to play this stock in the future. When the BK was announced "off the table" the stock went from .065 -.25, a nice 385% relief gain. Shorts covered and longs clamored for more shares. When news of the deal details and the 2nd phase was hanging out there, the Shorts sold back and took it down to .145-.165. A nice .42% gain for the shorts and ugly take down for the longs. We stayed stagnant then, as we are now, waiting for some news, and then the Malone 2nd phase closes and within two days the 10K comes out early, and its off to the races to a solid .425 with shorts covering and longs racing to get back in. Using .155 as a start point and .425 as the end point, we have another nice gain of 275% on that one. We then watched for no movement for a day or two, digested the 10K, and with no significant guidance, and a promise of no subscriber guidance in the future, The Shorts jumped back in and over a couple of days managed to spike us down do a .25 intraday and close of .30. The Shorts got another nice 29% gain on that 12.5 cent take down and the longs lanquished not knowing what hit them... We now have floated up from .30 to a pretty solid range of .33 - .36 where the Shorts, on low volume are biding their time and making money with their Lent shares... IMHO..

    What this little historic review should tell us is that, as John has said, there will be no short squeez but, we will see those lent share positions cover for profit, stay long through a leg up, take their profit and when everything settles at a new peak SP, take the stock down again... As the SP goes higher, the percentage gain numbers will decrease with every leg up and down, and with all of the shares in the float, will make taking out % stop loss sells harder for shorts to activate with their manipulation in a take down...

    I also agree with John that at least the first lot of lent shares, the 187M shares, are Note holders who want the company to succeed and are just using the short positions to protect the invested note positions. They will take these shares long eventually. IMO

    It will be at these levels, like relmor has outlined, that buying puts for Longs, will be the protection needed and available at realistic prices... These are the times that the retail investor can stop worrying as much about the Lent Shares and their impact on manipulating this stock down. With good FCF expectations the 2nd lot of shares, the 76M, are the ones left and held by traders and will have less of an impact moving forward.

    Combine a higher SP with better marketing, a step up in OEM #'s, an iPhone App, a better Internet presence, a newer and more innovative product line for Fathers Day, and the shorts will prefer to be long during this period of time.....

  10. socalrunningfool is offline
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    04-11-2009, 12:55 PM #20
    I expect this to happen on every sharp leg up, which is why I will play the "Pops and Drops" with them... JMVHO...
    ----------------------------------------------------
    Amen Cos. Thanks for the great thread!

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