"This was not, in my opinion, insider trading. It was a sale at a huge discount to the same value the folks that floated the secondary had stated - on average 50 cents on the dollar."
- having hit a high of $14.30 on May 30 which was still substantially below conservative analyst valuations ranging from $18 to $22 based upon predictions of Phase III success, on June 28 investors sold four or five million shares to the Russell 3000 tracker funds at a price of $11.96.
The Wedbush valuation of $18 at that point was based upon less than 8,000 patients using Arikace in four years time.
The reason the useless windbags who have been attacking me have all pretended to be incapable of calculating valuation is that they see no credible excuse for arguing that analyst valuations based upon less than 10,000 patients using Arikace were unrealistically high.
If we discount the possibility that the investors who sold to the tracker funds knew of Insmed's plan to issue shares at an even lower price than $11.96 - how could selling millions of shares at that price in those circumstances have been perceived as a good move by sellers who almost certainly DO understand valuation?
You don’t realise that the price of a PO is determined by the share price at the time of the offering.
Analyst valuations DO NOT set the offering price. They are relevant for an IPO (discounted some). But even then, the price of the IPO does not set the share price in subsequent market activity.
I don't think that a public offering at $18 would do very well when the market price was $10.70, you do?
It may come as surprise to you, but the market sets the share price.
Long term analyst valuations are not very relevant to shorts. They have to cover in a few days or a week. Finally, do I have to repeat for the 4th time that the PO made the price go up? So even knowing that the PO was to occur (which was, in any case, predictable given the shelf offering), wasn’t very good inside information now was it?
If the shorts knew that a PO at $10.40 would soon be made and thought that this would set a ceiling, they were wrong weren't they? Can't you get it into your thick skull that the price has not dropped below that since then (except marginally on low volume on Monday).
I don't imagine that any of this will be getting through your cognitive bias though.
1. "You don't realise that the price of a PO is determined by the share price at the time of the offering."
- I'm asking why investors were so confident in shorting millions of shares at apparently suicidal prices (see 2) between the end of May and mid-July. The offering wasn't announced until July 17.
But I do understand that an offering tends to be made at or around the current share price - assuming the BOD considers it a fair price for the assets of the shareholders it intends to sell.
I'm not clear as to why the BOD didn't simply delay talk of an offering for a few months, to allow the share price to adjust in line with analyst valuations. Nobody would have been expecting one before October, the time of last year's offering.
2. "I found that there are also some shares where the current market price is significantly ABOVE one year analysts target estimates."
- thanks, it hadn't occurred to me that those analyst valuations were for a year from now.
I've recalculated -
"We arrive at our $18 price target by applying an 8x multiple to our ARIKACE sales estimates in the US and EU in 2017, discounted back 25% annually."
$300 million x 8 x 0.75 x 0.75 x 0.75 / 32 million shares = $31.64
Where am I going wrong? Show me how you calculated a year-on target of $18.
I'm not asking for much. Just a single believable reason for investors to have sold four or five million shares to the Russell 3000 tracker funds at the end of June for a price which was over two dollars lower than the $14.30 a month earlier, and which was around 60% of the average analyst valuation based on less than 10,000 patients using Arikace in four years time.
50,000 are treated for NTM each year in the US alone and there are currently no approved therapies. One assumes Europe accounts for at least 50,000 more.
65,000 have Cystic Fibrosis in the US and Europe combined, and this Phase III success all but guarantees Arikace will displace Tobi as the central therapy in the CF antibiotic regimen.
A reasoned argument that the stock was worth less than $12 at that point, and that the analysts' predicted usage was far too high, would suffice. But as everybody who has attacked me so far has pretended to be incapable of calculating valuation I think we can all see where that road would lead.
Just one believable reason would remove the suspicion that those trades were made with the knowledge that Insmed intended to issue shares at an even lower price.
The investors who sold four or five million shares would surely have had a clear idea of a fair valuation, so it would be a waste of time for anybody here to offer a response which doesn't address valuation.
Investors who disclosed Short positions for mid-July recently sold over a million shares of INSM at an average price representing less than 60% of the average analyst valuation.
For all we know they may have sold five or six million shares during the two-week period from June 26, most of which they bought back. But we know with absolute certainty that they shorted at least a million more shares than they bought -
Settlement ... Short position
June 28 ... 2,089,095
July 15 .... 3,281,476
Date ......... High ... Low ..... Volume
June 28 ... 12.11 ... 11.58 ... 4,070,922
July 01 .... 10.65 ... 09.00 ... 4,792,748
July 02 .... 10.15 ... 09.67 ... 1,036,093
With analyst valuations all predicting Phase III success, what reason could the investors who Shorted millions of shares at a price below $12 have had for believing not only that the share price would go further below $12 with Phase III success - but also that the share price would remain at that level for as long as it took for other investors to sell back to the Shorts the millions of shares they would need in order to cover their positions with a profit?
It's obvious you can't offer an acceptable reason for the confidence of those Shorts in selling so many shares at a price which would have been suicidal were it not for the then-secret Insmed share offering they knew would establish a lower price. But you really shouldn't have given me the excuse to present the facts once more.
Why does CTIC have a one year estimate of 4 and is currently selling for 1? OMG, I just checked at random and there are many stocks where the market price is way below analyst estimates. The conspiracy is evidently very widespread indeed. Call 911 now!