Oct. 21 (Bloomberg) -- Galleon Group’s biggest stock holdings advanced today, limiting a decline that is 17 times faster than the Standard & Poor’s 500 Index since the arrest of Raj Rajaratnam, after the company’s founder said he will liquidate his funds and has been approached by potential buyers.
GLG Partners Inc., the investment firm founded as a unit of Lehman Brothers Holdings Inc., gained for the first time in four days. OncoGenex Pharmaceutical Inc. rose along with 6 of the 10 U.S. stocks that the fund owns the largest stake. Through yesterday, Galleon’s most-concentrated holdings had fallen 8.6 percent since co-founder Rajaratnam was arrested for alleged insider trading on Oct. 16, according to Bloomberg data. The S&P 500 lost 0.5 percent.
“At first, they’re speculating that those positions may be for sale, and now there’s a possibility that they won’t be,” said Hugh Johnson, who manages more than $1.6 billion as chairman of Albany, New York-based Johnson Illington. “It’s just traders speculating.”
Dan Gagnier, a Galleon spokesman, declined to comment.
OncoGenex advanced 0.2 percent to $30.48 at 1:43 p.m. in New York today, reducing a 16 percent drop since Oct. 15. The developer of cancer therapies tumbled 9.5 percent yesterday, the steepest decline since June.
Galleon owned 260,160 shares, or a 4.3 percent stake, in the Bothell, Washington-based company at the end of the second quarter, Securities and Exchange Commission filings show.
A single investor can usually afford to sell stock equal to 20 percent of its average daily volume without causing a “substantial” move in the price, according to David Blitzer, chairman of the index committee at New York-based S&P. OncoGenex’s average daily volume over the three months that ended Oct. 14 was 99,914 shares.
“If there’s a rumor that Galleon’s got to unload a huge position of stock X, I wouldn’t want to be trying to sell stock X,” Blitzer said in an interview from the firm’s New York headquarters.
Here is today's story from the WSJ indicating that Galleon has taken care to sell everything. I guess the 500,000 block was the sale of his 250,000 share position. Given that Nasdaq counts the buy and the sale when calculating the volume.
Galleon Group's liquidation of its hedge funds' portfolios is "more than 90% complete," a person familiar with the matter told Dow Jones Newswires on Tuesday.
The person said that the liquidation was done under "very difficult conditions," considering Raj Rajaratnam's hedge fund firm had about $3.7 billion under management as recently as two weeks ago. There has been "very little value leakage," the person said, meaning the sales of stock have been done at advantageous prices.
Galleon Judge Pushes the SEC Probe Widening in Galleon Case Rajaratnam: Relentless Pursuit of Data WSJ Topics Page: Galleon Group Some of Galleon's largest positions were in big companies like Apple Inc. and Google Inc., but it also had positions in non-mega-cap stocks, like OSI Pharmaceuticals Inc.
The only major market disruption that Galleon's unwinding might have caused occurred in Sri Lankan stocks early last week. Mr. Rajaratnam, who was charged with insider trading 11 days ago in New York, was born in Sri Lanka. Mr. Rajaratnam has said he is innocent.
The person familiar with the situation said that Galleon is still on track to pay back its investors by Jan. 1.
Write to Joseph Checkler at firstname.lastname@example.org
I didn't sugget foul play. Shorts are involved in legal trading (although I don't like seeing that type of activity from an ethical perspective where patients interests are at stake).
I am not even sure that shorts are driving down the price; my only point is that the shorts could account for a nice leap in price when OGXI achieves its stated goal of partnering.
Thanks for the postings of short interest. That is good up to end of Sept. I don't think current posting comes out till mid week and even then we are two weeks behind so we won't find out impact of sinking of Galleon for a further two weeks.
Who knows..by then the squeeze may be on. And I agree how positive the RBC and Dundee reports are. That is good support for longs here.
One other point that makes OGXI a good investment. They have a fallback position. Vis a vis their cash position and any problem that presents, OGXI has already turned down an offer by Isis to step in and make a deal which would shore up OGXI. They basically said, no Dad, I will do this myself, as all offspring should do at some point. But it is nice to know, if the wolves are at the door they can always move back in with the parent until conditions improve.
Here is current short data and I don't think there has been any large up swing. Your thread or thought process regarding shorts seems to suggest foulplay. I don't see it.
I am inclinded to think the stocks' action is more about nervous longs who want to take a profit. Look at the hedge funds besides Galleon who owned significant pieces of this on June 30. A Seatle newspaper had a story that the largest holder sold 1/3 of their position just as the stock touched 40.
Hedge funds take profits. They like to get their original investments out. Try to sell 50,000 shares in this stock and you will move it a point or two. Add Galleon to the mix and the trigger is pulled even faster.
Markets move up and down. Fundamentals are right in the long run. RBC Capital Markets is one of the biggest banks in the world and Dundee's guy was given best in field by Lipper just last April. Both give this speculative little company Buy ratings with targets of 70 and 65.
I am thinking some Monday morning we will be pretty happy we are in this one.
I'm somewhat worried about the markets in general because I think we're in for a change in investment theories.
I think what's facing Amaerica is much worse than Japan's "lost decade", which is now turning into its "lost two decades".
If you had a good year, spread it around. There's a lot of nice safe stocks out there.
I hope you're right. I've got an awful lot invested in this stock right now. The partnering/sale potential makes this stock makes it a compelling value.
I guess if word was out that Galleon wanted to dump a huge amount of shares (which I think was that 600K block), that could induce some panic due to the lack of float.
The big question of who bought it, and how long they intend to hold is another question. I hope it's not just to make 3-5 points. It would be nice to hear that it was another drug company,(with the wherewithal to potentially buy the whole thing!).
The silver lining in all of this is possibly Onco is getting a bit more attention with these articles. Investors may take a deep dive into what this "play" is about and like very much what they see. They may think...this thing may not go much lower and start buying up their positions prior to any forthcoming annoucement on a parternship (or buyout) or release of final survival data for the NSCLC indication.
So is this post basically stating that we are looking at 2-3 weeks of shares selling into strength? If we use the 20% rule that would mean approx 19K shares would be sold every day. Would this "overhead" have the same affect as a stock offering until it's all gone?
How do you equate selling a stock with a secondary? A secondary increases the amount of shares outstanding thus diluting the earnings per share. Go sell crazy someplace else.I welcome all the selling from weak hands who do not know enough about this great company.Galleon has apparently not sold a share so the lemmings jumped over the cliff without a leader. The weak hands are getting out.