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Synta Pharmaceuticals Corp. Message Board

  • jfk123_1 jfk123_1 Aug 1, 2013 7:11 PM Flag


    ctd. from previous message

    ...with management stake which is not likely to be lent out. So if for any reason any of the large institutional players who must now clearly be lending out for yield decide to take their shares off the lend list, then the shorts will be squeezed automatically as the margin to cover of available non lent out shares is way too low.

    THIS IS ALL ESPECIALLY TRUE IF AN EQUITY RAISE IS NEAR!!! The institutions who have lent out shares will not want to see their investment diminished. Whilst they may have been content lending out the shares and getting yield whilst temporarily absorbing a book loss on the capital position, there is no way they will choose temporary yield from lending at the expense of permanent equity dilution via new equity raise at a lower price level. So they will simply stop lending the shares out, calling them back from the shorts, who will have less than 10% at most of the float to try to buy back the shares. And if say more than 10% of the institutionally owned shares lent out to shorts are reclassified as unlendable and the shares called in, then you have a very real situation where covering is impossible until much higher share price levels.

    You are warned retail (and institutional) shorts.

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