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Novation Companies, Inc. Message Board

  • rsb_44 rsb_44 May 9, 2004 1:10 PM Flag

    Back to "short attacks" 2

    I was told to note that the changes in short positions preceding the price drop as though one caused the other. If memory serves (it really has been a long time) the fallacy occurs sufficiently often as to have a name post hoc, propter hoc.

    The personal attacking and name calling of each other by those taking long or short viewpoints also has a name ad hominem. It should be noted that ad hominem arguments have no bearing on truth or falsity of a statement.

    Lastly, for me is a point of genuine confusion. The shorts launch attacks to drive down the price of a stock so they can benefit from that drop ie make a profit. There have been several "short attacks" leading to substantial pull backs. Did the shorts profit each time? If they didn't or couldn't profit, why initiate an attack?

    The most current "attack" was massively successful - the 9/11 of "short attacks" on NFI. The price went from 70 to 28. (Recall my momentum pendulum.) Wouldn't somebody who instigated such an attack for the purpose of making a profit, actually take the profit? Shouldn't that profit taking show up in the number of open short poitions decreasing?

    If that number doesn't go lower, there needs to be some analysis of why it doesn't. That's called preserving the data. It's been noted here that a >potential< beneficiary of the "attack" couldn't take profits due to a lack of cash. If that's the case, why launch the "attack"? Why not wait until cash was available?

    Impending dividend payment caused "them" to "attack" now? Seems that would have figured into the equation to begin with.

    "They" are stupid and arrogant (ad hominems)so they didn't bail. How intellegent were longs to permit 2/3 (more or less) of their wealth to be eroded without taking any defensive measures? (Please note that I don't know that longs didn't defend. There was some anecdotal evidence on this board to that effect.)

    It has been said that if you torture the data enough, it will confess to anything. That may be the case with technical analysis. Some here have nored that TA doesn't apply to NFI. I've yet to be convinced of that.

    It seems to me that there is a false premise that underlies much of the "short attack" position. That premise is that fundamentally sound stocks with good earnings yields etc should be priced in accordingly in the marketplace. That just isn't so. The mob psychology of the market has no problem in ignoring the facts.

    Some people on this board seem to hold the belief that NFI should just continually tick upward because it puts up good numbers quarter after quarter. When the stock fails to do that, that data has to be preserved. Thus the "short attacks".

    There may have been "short attacks". However, there needs to be a much more detailed case made to be convincing. Perhaps testimony under oath? The details alluded to on the conference call?
    I'm not sure.

    One thing of which I am sure. If you believe in the fundamentals of NFI, if you believe in the safety of the dividend (and the accompanying yield) then you should own the stock.

    Without regard to causality, if you are aware of periodic gut wrenching downdrafts (and you should be by now), you should take steps to protect yourself. If you take those steps, "short attacks" become irrelevant. And that irrelevance guarantees their lack of success.

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    • Aok

      I think she is, and a black bra.

      Don't dream abbott it! Kiki

    • ILlucky wrote:
      "Wow! Another well-thoughout post that helps all on the board to understand NFI and its risk/reward ratio."
      I guess YOU can write a well thoughout post that helps all the the board to understand NFI and it's ris/reward ratio????

      Where or where can I read you synopsis??
      KG

    • Lucky Crazee

      We have suffered the likes of your idiocy for too long. Go about you dream of a place in Newport Beach or wherever. Nice little Carrera, cute little babe and all.
      You remain despicable, not even amusing, dipshit.

      aok

    • << It's been noted here that a >potential< beneficiary of the "attack" couldn't take profits due to a lack of cash >>

      Actually, at no time can a short not be able to cover due to a lack of cash. At all times, sufficient margin is escrowed to cover the position. The actual "purchase" does not decrease shorter's available assets- in all cases, if a short covers, his buying power goes UP at the time of purchase, because he releases more collateral than the value of his purchase. The exception to this is if shorty has negative equity (due to adverse overnight market moves). However, Rocker, etc., never has negative equity for more than a day. Before that point, his position will be closed by his broker. This can occur if a stock you're short doubles overnight. Next day, by 2:00, you either deposit more collateral or are bought in.
      Point is, it is impossible to be unable to cover due to cash shortages- you put the cash up (in the form of cash/equity) >before< you sold the stock short.
      >
      In any case, all this "blame shorty" stuff is nonsense. Short Interest on NFI is below the average NYSE short interest ratio, and last month's increase of 1mil shares is less than an average day's volume, spread across an entire month. So to blame shorty is to avoid looking for the real reason for the fall. Recently, rates have been moving up, the Homebuilders, REITs, MREITs, and financials have all been incredibly weak. Unless you think Shorty has AG in his pocket, you might want to look elsewhere for the reason.
      Also, lastest 10Q had a disturbing twist. Seems like they are having trouble booking gains-on-sale to neutral 3rd parties. Those were cut by 2/3s; while gains-on-sale via securitizations more than doubled. This cannot be a good sign; perhaps DDD et. al., can blame the shorts for that too!

      • 1 Reply to luckikaziee
      • Lucky

        What would happen to the price of NFI if it pays $8 in dividends this year and has $65 in dividends in its curren portfolio?

        Just a question I want answered.

        See, I am a gambler. I bought my first shares for less than $5 per share. I have owned the stock almost for ever. I understand the company and use to hang out here. I made so much money that I spend my time at the beach instead of correcting distortions of the truth.

        Oh, and I love the shorts. They have been so predictable on this stock that I have made tons of money from their take downs. I think shorts serve a function, but sometimes it evades my understanding.

        Kansas

    • <I was told to note that the changes in short positions preceding the price drop as though one caused the other. If memory serves (it really has been a long time) the fallacy occurs sufficiently often as to have a name post hoc, propter hoc.>

      Fallacy? Bull-hockey! On any given day, you dump a million phantom shares and you are going to drive the price down. Especially when that million shares is about three times the average daily volume leading up to April.

      I used to have you on my 'short' list as a basher but removed you because you seemed to be much more reasoned. However, this crap about 'shorts didn't do it', and 'don't blame it on the shorts', and etc., etc., sounds a whole like a rat in mole clothing.

      If you keep bending over someone will post hoc proctor you a good one. Your post is long on words but short on substance, in MOO. And, it's not the first time you have posted it. The same thing was seen from you a while back, and your point was just as fallacious then as it is now.

      Yep; ignore the trading patterns. Ignore the short interest. It's just normal market stuff.

      Nope; don't think so. Nothing 'normal' about the way NFI traded during April.

      bovine.

    • <There may have been "short attacks". However, there needs to be a much more detailed case made to be convincing. >

      There WERE short attacks. The short interest went UP 22% between March 12 and April 12, to the tune of just over one million shares. One million shares just happens to be 4% of the entire issued stock, and about 6% of the float. That added short interest brought the total SI up to 5.5 million shares or 22% and 34% of the total and float respectively.

      We have anecdotal evidence that the majority of the million shares short was done prior to April 12. That adding of a million shares to the sell side would account for the 18% drop in share price during this period. My guess is that the 'short' knew the WSJ would soon issue an article critical of NFI, the evidence for this is that Weil gives an unnamed hedge fund manager credit for steering him into the story.

      Then we have the story hitting the WSJ one minute after midnight on the weekend, followed by the disastrous open on Monday the 12th. I don't know if being the Monday after Easter added any steam to the ride, but I would think that there was short covering and additional shorting all the way down that 31% slope.

      Then, wham; Weiss files lawsuit using WSJ article as basis for the claim. This happened when? April 13? Then the other ambulance chaser climb on and the suits are announced one after the other, continuing right up through last Friday.

      The final kicker was the announcement by NFI of the informal SEC query, which hit the press as if it were a 'SEC investigation', and wham; another hit piece by Greenburg with headline claiming NFI being sued by MI carrier. False; but effective, and the combination of the SEC inquiry and the Greenburg article took the stock down in another high volume precipitous fall.

      It would be really great to be able to see where the short interest ended up after each of these high volume excursions, but it's not possible for us to do that. If I were a betting man, I would be that the total SI hit highs close to 7 million shares and at this time is in the area of 6 million shares. However, that can't be proven. We have to wait until about May 21, to find out what the SI will have been on May 11.

      If the next SI report shows it to be under 2.5 million shares then 'big short' has probably exited and left 'little short' holding the bag. If it's over that number then big short is probably still with us to some extent. It it's pushing 6 million, as I think it might well be, then both big and little short are still here thinking the company is going to completely tank.

      Any-who; your treatise re the lack of any evidence that there is a short-conspiracy, or short-manipulation, falls a bit flat when you look at the facts. Just the single fact that 34% of the float is shorted, and that a million new shares short were sold as of the last report, says that the shorts are indeed very very active and very much with us.

      Just MOO and WAGing of course; bovine.

      • 1 Reply to bovinepoor
      • <<...Weil gives an unnamed hedge fund manager credit for steering him into the story.>>

        Bov - do you have a source for this? I'd like to add it to the collection of articles I've been saving supporting the idea that somebody may be manipulating the stock. I reread a hardcopy of the WSJ article and didn't wee where Weil gave credit. Herb has acknowledged using hedge fund mgrs as sources -> I include this as mention in case the comment was intended for Herb rather than Weil.

    • I would like to believe the thesis that the Big Short has been replaced by the smaller retail shorts... and that therefore another large short attack is unlikely to be coordinated. I think I recall that the last months short interest total will come out on May 15 - if so, that will give a new data item for analysis. If it shows that SI is down to around 2 million or so, then I would agree that the Big Short is probably gone. If it shows that SI continues at 4-5 million, then I would think he is still in... although I simply can't understand why he didn't get out at less than 30.

      I had followed the tape during the last "attack", and I believe (with others) that there were irregularities. If you contend that such irregularities are "normal" in swing movements, I doubt that - but it behooves us all to be cautious in this and other low-capitalized stocks.

      What "defense" does a long have - except to continue to buy/hold, and get the truth out about the stock? I think the longs on this board have been doing that. The company officials are legally restricted as to what they can say and do. Within their restraints, I think they have done all they can do. Any suggestions???

      • 1 Reply to bubbygator
      • >> I think I recall that the last months short interest total will come out on May 15 - if so, that will give a new data item for analysis. If it shows that SI is down to around 2 million or so, then I would agree that the Big Short is probably gone. If it shows that SI continues at 4-5 million, then I would think he is still in... although I simply can't understand why he didn't get out at less than 30.<<

        Precisely my puzzlement.


        >>If you contend that such irregularities are "normal" in swing movements, I doubt that - but it behooves us all to be cautious in this and other low-capitalized stocks.<<

        No. that's not my contention. It's those details that need to be spelled out in order to make the case. How often do those "irregularities" occur?
        Can't be often or they wouldn't be irregular. Do they only occur when a stock is under short attack? More details....

        >>What "defense" does a long have - except to continue to buy/hold, and get the truth out about the stock?...Any suggestions???<<

        I think I've made this suggestion before, but let me present it again certainly in a little more detail.

        If you take it to be the case that somewhere around 10% should be the "appropriate" yield for NFI (and I take it many do since they are basing an upward price move target to deliver that yield), why not take what is in a sense "excess yield" and buy a put with it? The put gives you protection against downside movement in the stock. Consider the strike price to be equivalant to the deductible on an insurance policy. I'm guessing there are people who have more of their worth tied up in NFI than they do in their home. They wouldn't dream of not insuring their home, yet they are totally willing to risk all with NFI.

        There is no way I will leave myself as exposed as I have done heretofore. Fortunately,I had some protection from diverse holdings. Many here don't even have that.

    • >>It seems to me that there is a false premise that underlies much of the "short attack" position. That premise is that fundamentally sound stocks with good earnings yields etc should be priced in accordingly in the marketplace. That just isn't so. The mob psychology of the market has no problem in ignoring the facts.<<

      Barmore's "bet" is that at some point in the next 8-9 mos. after 3 more qtrly. earnings reports and 2-3 CCs and perhaps some other things shorts aren't "counting on" (ie, their truly false premises), that the longs' "false premise" will turn into the obvious and true premise. You are certainly right about pendulums; the question is which way will it swing now and how far?

      • 1 Reply to rkorinek2002
      • >>You are certainly right about pendulums; the question is which way will it swing now and how far?<<

        My target is/has been as I've repeatedly posted mid 50's within twelve months. Or if you prefer a dynamic target. 11X trailing 4 quarter earnings.

        I've posted a couple of my trades. The most recent one I posted within a few hours of having done it was a buy write. It should be obvious I didn't cherry pick that trade as so far it has gone against me.

 
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