MagicJack (CALL)

[Maverick74]

Quote from atticus:

Do whatever you want with your own shares, but using treasury funds to Texas hedge the company's shares? For example, CALL sells a bunch of puts in their passive program, but prior to the release of material non-public info which drives the stock higher. There are a million ways they can manip if allowed to do this. Unbelievable.

I know that M. Dell has had a trust which amounts to a hedge fund, but I didn't know he's using DELL treasury cash to play with the stock.

Would it be ok if DELL (corp) bought a shitload of puts a couple of months before a miss? I don't care who's doing it, but there is no way that should be interpreted as legal. Massive violation of fiduciary duty.

Atty, Michael Dell did use treasury stock. He sold the puts to grant the stock to employees.

This is very very common. I think it's stupid for a company not to do it.

 

[Banjo]

I know the Porsche comment wasn't the point, what about the GOOG story?

 

[Maverick74]

Quote from Banjo:

Some companies have their own in house trading floors.

http://www.businessweek.com/magazine/content/10_23/b4181033582670.htm

Porsche is well known for their ability to gain a nice % of income from FX trading.

Porsche makes a lot of money on trading. In fact, so much that analysts actually model their earnings more like a trading company then a car company.

GOOG also does this as well.

 

[atticus]

Quote from Maverick74:

Atty, Michael Dell did use treasury stock. He sold the puts to grant the stock to employees.

This is very very common. I think it's stupid for a company not to do it.

That's retarded.

 

[Maverick74]

Quote from atticus:

That's retarded.

How so?

Michael Dell had a program in place where he granted shares of stock to employees every year. It was in their contract. And he made no secret about what he was doing with analysts. Instead of just paying up for stock, he sold the puts. In many cases he still had to pay up for stock but at least it was partially offset by the put sales.

 

[atticus]

Quote from Maverick74:

How so?

Michael Dell had a program in place where he granted shares of stock to employees every year. It was in their contract. And he made no secret about what he was doing with analysts. Instead of just paying up for stock, he sold the puts. In many cases he still had to pay up for stock but at least it was partially offset by the put sales.

In lieu of delta1 dilution it's preferable, yeah. But this should not be done for any purpose other than ESOP.

The company should not be leveraging long, or short for that matter.

 

[Banjo]

I do agree with atticus, opens too many doors to manipulation and risk. Imagine a wild megalomaniac like Corzine at the controls. I still cast my vote in favor of him being drawn and quartered.

 

[Maverick74]

Quote from atticus:

In lieu of delta1 dilution it's preferable, yeah. But this should not be done for any purpose other than ESOP.

The company should not be leveraging long, or short for that matter.

They were not leveraging. How is this different then a company stock buyback which almost every company in America engages in?

 

[doublet83]

In the situation of CALL, if you just read some of their recent press releases, it seems clear that this is a management orchestrated pump and dump. CEO also just sold bunch of shares after a violent pumping process.

I would have shorted had not the cost of borrow been over 60% at IB.

 

[Maverick74]

FWIW, GOOG is in the process of building an energy trading desk, going to be huge.