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Synta Pharmaceuticals Corp. Message Board

  • riskreturn168 riskreturn168 Aug 18, 2013 12:30 PM Flag

    Can Someone Explain the "Short Squeeze" Numbers Here?

    Based on the information provided by Yahoo I am seeing 69 Million Shares Outstanding. Kovner owns about 6+ Million Shares and his old company Caxton owns 23+ Million shares. There are 16 Million shares Short. By my math that still leaves another 23 Million shares. Why couldn't the shorts cover with those remaining shares? How does anyone know how locked in those remaining 23 million shares are? For there to be a squeeze, most of those remaining 23 million shares would need to keep holding on when the price starts to rise. How do we know they are that locked in?

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    • this is a bit off topic, but I don't think we should be focusing our attention on a possible short squeeze. for a long-term investor in this company, I think what is more significant to remember is what makes this short squeeze possible - the significant stake taken by insiders in this company, the amount of shares they control. this indicates very strong conviction in the company and also a possible future going-private transaction. the possibility of a going-private transaction seems much more worthy of attention to me than the possibility of a squeeze because it should give investors the fundamental reason they need to hold onto their shares regardless of short term pirce fluctuations. we all know biotechs are volatile, that shorts can drive down the price between news events, and also macro events in the market (like the decline of the last few days) can lead to rapid price depreciation. so the main thing is to focus on the fundamentals here and the conviction demonstrated by insiders so you hold you shares and don't get shaken out. if you read the messages here clearly and have the capital available, there is every reason to keep building your position each time SNTA dips.

      Sentiment: Buy

    • There are just over 40m in the float. Use the right variable/number.

      And you dimwits still don't get it. Kovner and Caxton can also buy more shares by buying call options - without having to declare the purchase of effective control over the underlying shares until expiry. There are over 15 million shares as underlying for November options - how much you want to bet that Caxton and Kovner own some of those calls? Lets say they owned half the November calls, then together they can control 35m shares out of a 40m float. Then add the shares from other executive insiders and you get to 38-39m shares controlled and not available for covering. Leaving just several million shares of the float left with which to allow a huge short position to cover. And that assumes that even those shares are available for loan.

      Anyway you cut this, it is a massive miscalculation for anyone to be short here on anything but an intra day, quick trade basis - and even that is super risky.

      • 2 Replies to jfk123_1
      • "And you dimwits still don't get it...."
        You certainly are as gracious a poster as can be imagined...
        Thanks for gracing us with your illuminating wit.
        The "F" must stand for "feckless"...

      • Oh, and nothing stops Kovner and Coxton from lending shares to shorts - thereby allowing for an even bigger squeeze to higher prices. Lending to shorts gets them income yield, helps them buy shares at even lower prices. Institutional investors are also doing this. Now all they have to do is pick up the phone and call their shares in. Presto the shares are indicated 10+ in pre market one day on no news. But it will be the institutional shorts who are able to get out relatively quickly with a 30+% scalping. The retail shorts and other less nimble or connected institutional shorts will be forced to chase and drive the squeeze and cover at much higher prices. This is the way it works folks. And this board will be full of clueless retailers, many scared shorts, talking about market maker manipulation, analyst price targets, etc. But in reality, it only takes a phone call. This is why anyone stupid enough to be short in this situation deserves whatever pain comes their way. Only a fool would be short. Your executioner may very well be the same person lending you shares to short.

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