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Martha Stewart Living Omnimedia Inc. Message Board

  • apostate_001 apostate_001 Jan 6, 2006 7:05 PM Flag

    Price Manipulation

    Over the past couple of months there have been a lot of allegations on this board about manipulation of the MSO's share price. These allegations haven't elaborated on details, except perhaps a passing reference to 'the market makers' or writers of puts. I'm skeptical that such manipulation is happening to any significant degree, but nevertheless I would like to read, while keeping an open mind, more on this subject from you boarders.

    I certainly have noticed recently that, about 30 minutes before the closing price is set, a large order often jacks up the share price by a dime or two. Today, Friday, Jan 6, is an excellent example of this phenomenom. Also see: Dec 22, 23, 28, 29, and Jan 3. Am I imagining things or is someone running a game?

    For my edification, please post your suspicions about manipulation as to who, how, and why.

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    • This may have already been said, but in the last 30 minutes of the day, daytraders buy to cover short positions or sell long positions. They do this especially on Fridays so that they don't have the position over the weekend.

      Nothing illegal there, of course, and in a light-volume stock like MSO, the effects are more pronounced. And this happens in a LOT of stocks. In the case of MSO, IMHO the daytraders short in the morning, and cover in the afternoon.

      Also, anyone who doesn't believe that the Options Market people aren't manipulating where they can should come and see me, so that I may sell them land east of Miami Beach. :-) Even stocks like GOOG are affected by these Options peeps, and this is one area IMHO the Government should be investigating for manipulation.

      All this gets combined to create some of the effects that you've noted the past few weeks. Beyond the Options players (and they're just trying to "pin" a price more than anything else), I doubt that anything illegal is going on.

    • A very similar pattern has been noticed in Krispy Kreme. Also, Krispy Kreme has upticks in the last ten minutes or at the very end of trading.

      This has gotten considerable comment on the Krispy Kreme board, but the discussion is no more conclusive than here.

    • This could be accumulation. Hoping for higher openings and also looking at the huge gap just above us. If we get to the gaap the shorts will be in a trap and head for the exit door.

    • I don't believe there is any manipulation in the sense of anything illegal.

      When a stock is as heavily shorted as MSO, there is an exremely low "effective" float. Traders and hedge funds can have a field day.

      YOuhave to live with it if you are short MSO. But, look at the 3-month chart. The bears are slowly winning the tug of war.

      BTW, it won't take any fancy bookeeping to show aprofit for 05Q4. 06Q1 will be quite another story!

      • 1 Reply to sandyclaws_99
      • In posing this question/issue/thread regarding price manipulation, I likewise figure there is nothing illegal going on.

        And, yes, I understand that the 'float' is small. But Sandy's reply that "Traders and hedge funds can have a field day" is vague. I'm trying to understand the details about what they (and who are 'they') are doing specifically, if indeed they are successfully manipulating the price.

        Perhaps my problem is that I just don't understand the logic of such manipulation. If a deep pocket is trying to protect a long position that is obviously underwater, does it really make sense to throw more money down the rat hole with the intention of manipulating the price upward -- temporarily at best. It takes serious money to jigger the price even a little bit. For example, in the last half hour of today's (Friday's) trading, somebody bought roughtly 300,000 shares at more or less $18.37 (i.e., $5.5 millon $$). That looks familiar and suspicious to me. However, who is willing to put out money like that to move the price by a few cents -- temporarily? Most of my friends wouldn't spend $5.5 million unless they truly believe in the merit of the trade.

        I'm not trying to argue with anyone to make any point. I don't know what to believe. I'm asking for more information about the allegations of price manipulation that I've been reading on this board, hoping to get a better insight into what is happening behind the scenes with MSO.

        (Incidentally, I hold puts that are in the money.)