I am trying to catch up on status of funds selling off their RTI shares. In SEC filings for 10/16/2008 I see an SEC Form 4 that discloses sales by Harbinger, HMC, and some individuals. It's not clear to me from Table I in this form, which lots of stock are being sold by which entities. It's important because they disclose the remaining numbers of shares of each entity and I want to keep track of the selling by each entity over time.
It looks like these funds are selling off about 5% of their holdings during each two day period, so we could be in for another two to four weeks of this sell off if these are forced liquidations. Does anyone have any insights on when Harbinger and HMC's powder will run dry?
Let's work on the assumption that they intend to sell 100% of their holdings, just to plan out for a worst case scenario.
Solo started the other thread back a month ago. Harbinger was already selling at that time. They have sold about 1.7 million shares. From the other thread I posted the Dow Jones note from today (10/22/08) which said Harbinger reduced to "1.13 million shares, or a 4.9% stake, from about 2.81 million shares, or a 12.2% stake, it held as of June 30." And that is just one of the sellers, albeit a big one.
I do not know how much more they are going to sell, but I hope the post was made by DJ to kind of indicate they are near the end. But there is no indication that they have revealed their thoughts one way or the other. Anyway, to be safe, I figure any into strength as they have been they could continue to sell. It does not help their position to wash out the stock price either. Once selling is done though we are left with a very oversold position. But this has been the negative in this stock which only stands to reason why this is down so. Harbinger was a counter party with Lehman.
The negatives here I see (which others can add to) in the near term: 1. continued selling (or selling into any strength) by the likes of Harbinger. 2. Continued commodity sell off. But Titanium is pretty sold off already along with most everything else. 3. a huge market drop yet or the market is so bad that BA just falls apart.
The positives on the horizon: 1. Oversold situation provides some bounce. There is still a pretty high short position in this stock. 2. BA strike comes to an end and titanium is needed back in the supply channel. Another bounce. 3. 787 production ramps up. Hopefully during this strike engineering has taken the time to really focus on 787 issues. Another bounce. 4. And maybe, just maybe the market has a bounce once this credit starts to unplug.
As far as RTI, and I am not as well versed as others, but a big drop from here and I question in my mind if a foreign buyer, i.e. China, comes in and gets a premium titanium company. ATI and TIE have their own stories. RTI's market cap today is listed as 290 million, down from about 1.8 billion at its high. It is already very cheap. Drop the share price more and it is just that much less. Or what about a Harold Simmons buying this thing up? That would be interesting!
Please remember that Harbinger is not selling on fundamentals. They probably have forced liquidations from clients who want money back, and/or they need to raise capital to meet margin requirements on now-unhedged positions to which Lehman was a counter party. The Harbinger fund manager(s) are probably crying in their soup about this: they have to know they are selling below cash value, and at a price they should be buying not selling. But they have no choice if it is a forced liquidation.
Their pattern to date has been to sell for one or two days, and then to let buyers come in and take the price back up. With a roof established by each sucker rally, they come in and sell it back down for two days.
I'll run the numbers later, but 1.13 million shares sounds like about four to eight weeks of continued selling. It could get quite ugly, and personally I'm not sure I would want to guess a bottom. But...me thinks near the end we have an unbelievable buying opportunity.