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Insmed Incorporated Message Board

accugrowth 6 posts  |  Last Activity: Sep 4, 2014 3:43 PM Member since: Oct 16, 1998
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  • The ELNK Call Contracts show a significant volume. One contract is equal to 100 ELNK shares.

    I have written previously about the Oct 15 Call Open Contracts that represent 8 million shares and originally purchased for $40/contract or $3 million. An additional Jan 15 Call Open Contracts representing 3.7 million ELNK shares were initiated today at $65/contract. The March contracts also showed action yesterday and today.

    The strick price for these Call Options is $4/share. The option action implies a bet that the share price will be higher than $4.40 by mid October and higher than $4.65 by mid January.

    There is always someone on the other side of the trade. For options, it is normally a broker who is betting that the share price will not hit those lofty levels and they will get to keep the funds paid for the Call Options. There are ways they can cover themselves by owning shares. Or, the short sellers may be buying Call options to cover their short position in case of positive news.

    The presentation by the ELNK CEO reiterated that management is looking at divesting some assets. Listen to the call for the details.

  • The top 15 Institutions who own ELNK hold 60% of the outstanding shares per the NASDAQ website. This puts a huge amount of power in just a few hands. The ownership update shows that the Tutes trade shares between themselves with shares sold almost equal to shares bought during Q2 - see the data below.

    Retail investors are a small influence on this stock. I continue to watch the 8 million October 15 Open Interest Call options with a strike price of $4 that were originally bought at $40 per contract and now worth $80/contract. I still think that this $3 million bet is related to the 10 million shares sold short. The position needs to be resolved within the next 60 calendar days. My guess is that the short sellers are planning to cover their short position by buying ELNK shares. This will result in an increased share price. The short sellers capped their cost using the Oct 15 call options.

    Other observations or analysis of this dynamic are welcome.

    Increased Positions 71 8,967,334

    Decreased Positions 69 8,258,554

    Held Positions 27 67,520,998

    Total Institutional Shares 84,746,886

  • Revenue is stable from Q1 to Q2. That is good news. Expenses are also under control. Guidance for Free Cash Flow for the year was increased by $25 million. That means the dividend is safe and ELNK can begin to pay down some debt.

    The October 2014 Open Interest on Call Option contracts (100 shares each) continued to increase to 79,600 contracts from 72,000 from just last week. That represents 7.9 million ELNK shares with the expectation of a share price over $4 during the next 75 calendar days. The short interest is 9.9 million shares as of July 15. It looks like the shorts have hedged to cover their position. IMHO

    The Institutional holdings for June 30 have not been released yet. I expect that it will show an increase from the 82% reported March 31. That means fewer shares available for retail investors.

    The WIN announcement last Monday that they can create a REIT and remove their debt load applies to ELNK. The written Q2 report does not provide any guidance. I am sure it will be a question on the Conference Call on Tuesday AM. I am looking forward to the details.

    McRed -- your predictions of doom and gloom have not been correct for over 4 months when ELNK hit its 52 week low. It is time to give credit to management, where it is due.

  • Reply to

    Article on AWS. Commodity prices

    by mccormickred Jul 27, 2014 12:57 PM
    accugrowth accugrowth Jul 31, 2014 9:17 AM Flag

    With the Windstream news, ELNK stock price is up and the October 2014 Call Contracts increased by more than 10% to 78,000. Multiple the number of contracts by 100 = 7.8 million shares. This wipes out the 10 million short shares.

    As the shorts take action to close out their position, the holders of the Call Options will make a significant Return on Investment (up 50% at the moment from $40/contract to $60/contract).

    This is called momentum. Some of the holders of short shares are also holders of the Call Options. That is called hedging. They make money as the share price goes up or down. It is headed higher.

  • Reply to

    Article on AWS. Commodity prices

    by mccormickred Jul 27, 2014 12:57 PM
    accugrowth accugrowth Jul 27, 2014 3:50 PM Flag

    The Short Interest for July 15 is slightly changed to 10 million shares. However, the most recent Call Options for October 2014 greatly increased to 70k contracts with a strike price of $4. Since a contract is 100 shares, that makes the bet that ELNK will increase in value at 7 million shares.

    It seems that someone is covering their increased short sales by buying a bunch of Call Options. If they start buying back their short shares, the price may go up. And then they also profit from their Call Options when the price goes above $4/share.

    By the end of this week, the Institutions need to report their June 30 holdings of ELNK. I am going to guess that the major holders will have an even greater percentage ownership this quarter than in Q1. Retail is being squeezed out, but will be attracted back when volatility returns to this stock. The hedge funds will take full advantage of the moment.

    I am as cynical as McRed. But plan to use my eyes wide open approach to profit. We will know the Institution position before the Q2 report scheduled for Aug 5

  • accugrowth accugrowth Jul 26, 2014 10:15 AM Flag

    The Short Interest for July 15 is slightly changed to 10 million shares. However, the most recent Call Options for October 2014 greatly increased to 70k contracts with a strike price of $4. Since a contract is 100 shares, that makes the bet that ELNK will increase in value at 7 million shares.

    It seems that someone is covering their increased short sales by buying a bunch of Call Options. If they start buying back their short shares, the price may go up. And then they also profit from their Call Options when the price goes above $4/share.

    By the end of this week, the Institutions need to report their June 30 holdings of ELNK. I am going to guess that the major holders will have an even greater percentage ownership this quarter than in Q1. Retail is being squeezed out, but will be attracted back when volatility returns to this stock. The hedge funds will take full advantage of the moment.

    I am as cynical as McRed. But plan to use my eyes wide open approach to profit. We will know the Institution position before the Q2 report scheduled for Aug 5.

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