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MannKind Corp. Message Board

  • bio.invest bio.invest Aug 20, 2013 4:07 PM Flag

    Al Mann should do what Federico Pignatelli, CEO of another biotech company did to stop short attack

    Mr. Federico Pignatelli decided to offer dividend a tiny amount ($0.001) per share to activate audit and thus stop the short and start a short squeeze.
    Call and/or email to IR of MNKD for attention to Mr. Federico Pignatelli's recommendation to small biotech businesses.
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    Part of the SA article
    ...
    If a company declares a stock dividend both the naked short seller and the short seller are on the hook to deliver those shares to the lender. This forces the short seller to "buy to cover" so they can return the shares to the lender. Couple this with the typical price appreciation of a dividend announcement and the fact that short sellers can get caught in a stampede that is self perpetuating because all of the short sellers try to "buy and cover" or exit at once. This phenomena is known as a "short squeeze" and drives the share price higher as shorts rush to the exits to close out part or all of their positions or at least whatever is required to satisfy the stock dividend requirement. Stocks with a high percentage of the float sold short are particularly susceptible to this phenomena.

    Naked shorting can also effectively be accomplished via an illegal option strategy abusing the market maker exemption for short sales called a "reverse conversion". The SEC has caught onto this scheme and recently put out a "Risk Alert" detailing how to identify this activity but few think this "risk alert" will amount to any additional enforcement. The net result of illegal reverse conversions is a flood of fake shares that the short seller pours onto the open market in an attempt to quash rallies or stifle the stock price. These option pirates would be affected, just like a naked short seller, by a company issuing a stock dividend.

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