I was wondering where the frickin 50K sell blocks were coming from twice a day creating new bottoms day in and day out. Interesting...now, I wonder if anyone will actually do\be able to do something about it...
FINRA- Hercules has been the victim of Illegal Abusive Naked Short Selling since July of 2013 when the equity peaked at $7.96 a share and a short position just shy of 1.7 million shares. After that peak the short position increased three fold to 4.3 million shares in just two weeks and has hovered between 1 million and 2 million additional shares short from July through December of 2013 leaving an open short position just shy of 8.1 million shares. Hercules beneficial share volume has been less than light to say the least and once you subtract out the High Frequency Trading of Phantom shares, the short sellers were increasing their short position exponentially within options trades to further drive the price lower and in one case on January the 7th, the short sales accounted for nearly 75% of the total beneficial shares traded.
In the past 15 trading sessions the short position significantly increased with over 50% of the beneficial volume being shorted daily and is easily accessible at FINRA's RegSHO daily reporting site. I will save you the trip but this is how the numbers break down; from January 2nd to the 22nd an additional 5.9 million shares were shorted and on the 23rd when the downgrades were issued by Capital One and Global Hunter, an additional 2.7 million shares were shorted sending Hercules Shares into a RegSHO violation for multiple fails to deliver by institutional traders. Shares also touched a new 52 week low of $4.62 which is quite absurd given the more recent developments at the Houston based driller.
In SHORT the most recent price action in shares of Hercules have little to do with what is unfolding in the financials and fundamentals, and has everything to do with Illegal Abusive Naked Short Selling and at these artificially depressed levels the shorts have made the fundamentals look even better. With Hercules set to release earnings on February 6th, 2014 BMO; that is roughly 17 million short shares that now have to cover on a severely undervalued company with substantially improving earnings trends and fundamentals. Given that total shares owned are hovering around 82% that leaves little wriggle room on a 27 million share open float trading against a 17 million short position. It is apparent the short and distort campaign as well as the RegSHO violations has over-extended the short sellers and the retrace will most likely be twice as violent than the bear raid.