Smart money piling in on the short side - spike in short interest, impossible to borrow. Why?
Shares outstanding after recent dilution = 184m! That's 7x more than most of the news outlets (including Yahoo) have listed. Yahoo Finance lists a $280m market cap for HK. HK's market cap is actually $2bn after dilution.
Good luck to those indy investors who didn't take the time to read the 8-k filed on 2/14 (or don't know how to calculate shares outstanding using the treasury method).
If you own shares of a company (HK) that has to pay 8.875% interest to borrow
money, sell it an buy shares of a company that is refinancing at about half
that rate, such as GGP. Just check into the cheap rates that companies
are paying for loans and for refinancing in this day and age! But not this
Sentiment: Strong Sell
Oh my! Longs are saying this is a great deal. Shorts are saying retail AND institutional investors are stupid.
Hmmm. I would suggest you read my earlier posts where I laid out the game plan - which just so happens to be the plan used at Petrohawk. I can almost guarantee you this won't be the last stock offering. They're kind of painful when they happen, but contrary to what EandPexpert thinks, the people that bought these shares are much more in tune with what is going on than he is. I suspect they have found something and want to start on a buying spree similar to when Petrohawk sold their Gulf Coast assets and bought Haynesville and Eagleford. Stock offerings are only a problem if they use the money to pay the electric bill and the company picnic. I suspect they've found something with some value.
What's likely happening is that large shareholders who suddenly got a 4+x return on their investment overnight for no fundamental reason are blowing (BLOWING) out of stock and then indy investors see a "double-bottom" or whatever other stupid technical indicator they look at and buy the thing up.
The "bag" is being transferred from those who know to those who don't know.
Who will be holding this bag in the end?
1) Those who took profits on a fallaciously high stock price?
2) Those who looked at some technical mumbo-jumbo and talked tough on the message boards about how much they're going to buy as the stock-price tanks toward fair value?
I would say about 27 mil. old ram shares plus 73 mil. Floyd shares,Then convertible note could be 60 mil. shares and warrants 37 mil.,but they would bring in $110 mil.So right now about 100 mil. shares out.