Posted by: Belinda Bicciano Jr
In reply to: None Date:10/5/2006 3:00:16 AM
Post #of 1007
"BuyBack" Stategy.
Since I saw many posts containing only partial information about the "buy back" process,
and since I wanted myself to know exactly how it happens, here it is...
"any discrepancy revealing a short position in the company's stock will result in a mandatory cert exchange program to force the short position holders to cover the negative balance"
Well, actually, with NOBO & DTC lists comparison it is possible to know who has shorted "ghost shares" (naked short selling), even if that person, group, organization has covered or not. Traces are available to investigators.
Rules that can be forcely imposed to naked shorters, since 1st of January 2006 (SEC):
- the identified naked-short-seller trading account is freezed till conclusion
- in case of he has not covered, negative balance is automatically covered at market price, taking any other assets on the trading account, and if not enough, covering procedure is launched against any of his personal goods...
- covered or not covered, if he made a loss on the operation, he assumes it
- covered or not covered, if he made a profit on the operation, the exact amount of that profit is transferred to the shorted Company, taking any other assets on the trading account if necessary, ... The Company will exclusively use that money afterwards to help the SP going back to the previous levels.
- all shorters have to pay a fine, a fix + a proportional, fine that is used to pay the all process (Regulation authorities, ...) - the eventual excedent is for the Company, but exclusively used for same purposes (help the SP...)
Knowing those rules, the "buy back" strategy becomes more evident:
- the "buy back" first phase, before mandatory cert exchange, mainly consists in sitting at a certain ask (mobile fork [0.091;0.094] e.g.) in the way to get a maximum of cheap shares (will be cancelled afterwards for those bought by the Company as announced) (which consist in an incredibly good investment for private capital, specially in that first phase)
The other goal of this is to ensure the SP to not go further down than the decided level.
The mobile fork can move up or down, depending on normal market conditions.
- at the time the cert exchange program is effectively starting (means all naked shorters identified & concerned trading accounts freezed and under control), the "buy back" mobile fork will suddenly move up, since the threat of further artificial down-pressure is of the past,
bringing the SP to a higher level, buy the way making the covering expensive to the (rare) not-yet-covered shorters...
- at the time of the conclusion, shorters'profits & fines money are available for the final phase, that one is very easy, it consists for the Company in spending the shorters money, the goal is to bring the SP back where it was before the attack. To do this, it usually happens that shares are bought by blocks by level steps increased of x% each time, and sold afterwards at x% under the current SP. That way the "artificial money" from shorters that came from "artificial shares" is fully spent in the market momentum.
example: buy 250000 shares at 0.15 then sell some at 0.14 and some at 0.145, then buy other shares at 0.165, then sell it at 0.155 & 0.15, and so on, creating an ascending bullish pattern, ensuring shares to be bought by private investors, and finally bringing the SP back to where it was (actually I think that was about 0.21 before the attack started)
Now, if after that, a PR comes out to say that 13750000-US$ settlement arrived in the bank, I will for sure enjoy the end of the year...
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