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Sarepta Therapeutics, Inc. Message Board

  • simp08801 simp08801 Jun 7, 2013 11:28 AM Flag

    this Russell 2000 issue may be more relevant

    I believe it is now confirmed that the Russell 2000 Index Fund buy in is, in fact, around 2,800,000 shares worth
    the Russell rebalance schedule is as follow
    June 14 - preliminary list of additions/deletions issued (Srpt is a guaranteed Russell 2000 addition)
    June 21 - first list update issued
    June 28 - 2nd list update issued AND rebalance effective at market close
    in other words, the Index Funds will all be buying the stock from the market makers in the the last 30 minutes of trading into the early after hours (you will see huge block trades at or near the June 28 closing price)
    the real question relates to how the market makers choose to fund the sell side of the Index Fund buy trades
    in my experience, generally, it seems that the MM's mostly use their Reg Sho "bonafide market making" exception to the naked short prohibition, and naked short the stock to the Index Funds
    what happens next is obvious to those who have followed this process: over the next several trading days, the MM's will engage in gross price manipulation to recover the stock they shorted out
    I strongly believe this is what happens most of the time, but it is not universal
    and perhaps a company like Srpt will be the exception
    I cannot comprehend how a self respecting marketmaker would review the Srpt float situation and conclude that naked shorting Srpt to fill the Index Funds is a wise move
    the analysis of the float is relatively easy and can be done very quickly, as the shares out and shares short are public, and making an educated guess on long shares locked up is not that hard
    the reported short interest as of May 30 will be out at 4pm on Tuesday, June 11
    assuming the MM's do not want to short the stock, they appear to have a ton of buying to do in a relatively short period of time
    and during this exact period of time, it is a good bet that the process of the activists delivering patient anecdotal evidence to the FDA will be taking place, and will be publicly commented on by the activists ...

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    • Check out INSM - big boys like Fidelity, Baker Bros, Orbimed. RA CApital have been loading up on this one. Think this will be next multibagger as it will be added to Russell Index this year. Stock has performed great - think goes to $25 in 2 months......

    • Don't forget also that all stocks are surging. Biotechs are leading the pack. The ETF's and mutual funds may be experiencing a swing back to risk. Who would want .1% interest when they hear that stocks are coming back.

      During the tech boom getting incorporated into an index meant instant wealth for the shareholders and especially for the call holders. The shorting lately has backed off and retail shareholders selling into price spikes have been getting wacked (thank ...). So this time may be different. Sarepta's stock behavior has changed. Who's going to fight the trend?

      Sentiment: Strong Buy

    • It's clear to me that you have more experience than the average investor in SRPT, related to how index funds and market makers balance long/short positions, relative to specific stocks within the Russell 2000. Assuming SRPT is added, what's your best guess as to how this plays out relative to pps on or near June 28?

      Sentiment: Strong Buy

      • 1 Reply to mdwhittier
      • I have been in many stocks over the years that were added or deleted from Index Funds

        In my younger days, I would be either thrilled, waiting for a price spike, or horrified, waiting for a price crash

        most times, nothing happened, in either instance, in and around the rebal date

        so I am not a "play the Russell rebalance process" believer

        having said that though, it sure does look like (based on public info) that the srpt float is vapor

        will the mm's naked short into that vapor?

        my guess is that at least in part, no

        seems to me they will at least buy some stock in advance heading into the June 30 rebalance date

        this could be putting a floor in the bid right now

        timing is everything

        and the timing of this Russell 2000 process fits right inside the now known impending process of activists communicating AGAIN with the FDA on anecdotal patient evidence

        we do not believe ourselves, but we believe these activists, because they have not been wrong to date on anything they have said

        so we have a known Russell 2000 process, and an impending new activist/FDA process at the same time

        what if the activists positively speak publicly about their latest process during that Russell witching period?

        I would not be sleeping if I had a meaningful short here

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