ABOUT THE LIKELIHOOD OF A SHORT SQUEEZE, READ THIS...
I have already posted about how there is no real margin of shares for shorts to cover, due to the large short position, large insider share holding, and the massive purchases of Mr. Kovner. There just is very little float left to get shares, and that is why the shares are on the hard to borrow list on every run up.
Now if any large institutional owners decide to shift shares marked as lendable to non-lendable, that in and of itself can trigger a massive squeeze.
But even more interesting is Mr. Kovner. With the last reported figure showing he owned over 6 million shares, or around 15% of the float and around 9% of total shares outstanding, he is approaching a mandatory disclosure of a material shareholding as per the SEC. When this happens upon the triggering purchases, the shorts will then be able to ascertain the extent of his position in the company. Now what would be really interesting is if he makes a comment about gaining full out control of the company, or taking the company private. This would cause a massive rush to cover and short squeeze.
Also of note for the less sophisticated (not meant as a put down, but this is a technical but important detail), look at the massive outstanding call option interest for November. The approximate translated share ownership of all of those November calls is greater than 15m shares or 40% of the float and 25% of shares outstanding. Now what would happen if Mr. Kovner declared that he owned those options? His controlled shares in the company via shares owned outright and those controlled via call options, would amount to around 55% of the float and 34% of total shares outstanding. Now anyone who can do the math can see that this means if at least half of the remaining insider shares are locked up and not for lending, shares would not be able to cover their positions. This would lead to a massive squeeze.
Very similar situation setting up here to what happened with Porshe and Volkswagen. Almost identical.
jfk, I know you have lost patience to make quick money on SNTA. If you still hang on this board, can you give some update on what you wrote two months ago? Even the short squeeze has not happened so far, your writing still makes sense today.
The big question I always have is who are those shorts. This might decide if Kovner side want a short squeeze or not? Are they Kovner's friends or enemies? This stock is so well-controlled and makes me curious who is on the driver's seat.
One other striking similarity is the contention of the shorts that a much lower price is warranted, coupled with a willingness of the shorts to maintain and add to their positions despite continued insider buying and price support. Porsche continued to prop up Volkswagen's share price, in that continued purchases both raised and supported the share price and effectively removed shares from the float and from shorts. Then when Volkswagen announced that Porsche effectively controlled 75% of Volkswagen both directly via shares and indirectly via a large portfolio of owned call options, shorts scrambled to cover. The squeeze was of epic proportions, multiplying the market cap of Volkswagen multiple fold in only days, making it at one point the most valuable company in the world by market cap. The hedge funds who bet against Volkswagen were ruined on their short positions, and several tried unsuccessfully to sue in the New York court system and lost (boo hoo :-) ).
Kovner can do the same kind of damage here folks. I could of course be wrong, things could work out differently. But it is extremely easy to come to a very plausible set of circumstances where we see a massive, massive short squeeze here. I reckon if Kovner takes this company private and sets a price straight away, he is doing shorts a favor, limiting their losses by avoiding a massive short squeeze. But if he wants to be nasty, the short position is already precarious from a covering perspective, and if he buys some control through calls, it is bk (no pun intended) for the shorts. And oh, I forgot, Volkswagen just sold unsexy cars, so purely a technically driven squeeze. Here we have inoperable cancer patients who are restaged and likely cured. Ouch for the shorts - this could get very, very nasty for them.
If you like this analysis and find it of merit, send it around on some other boards and give it an approval. Let's get people talking about this. It isn't hyping, that is for sure, and shorts talk a lot