New shorting technique

[shortrader]

I came to hear about a new shorting technique wherein you give cash to distressed companies in exchange for their shares at a discount. Then you short sell its shares to bring prices down and profit from the fall. I may be a bit off about the exact details. Anyone knows the name of the technique?

 

[El OchoCinco]

Maybe you heard it from someone in federal prison jailed for stock manipulation.

So you "buy" shares at a discount by giving . money to the company and then short shares in the market and when the stock drops you make money on the short shares but lose.money on the discounted shares..these are 2 separate transactions.

If not separate then the selling short is actually selling the discounted shares at a profit and i find it hard to believe a company would give shares with no sales restrictions.

uh...

 

[tomorton]

I think you've only got part of the story concerning this technique.

 

[murray t turtle]

I came to hear about a new shorting technique wherein you give cash to distressed companies in exchange for their shares at a discount. Then you short sell its shares to bring prices down and profit from the fall. I may be a bit off about the exact details. Anyone knows the name of the technique?

%%
SOUNdS LIKE an inverse ETF, except not likely any one trader ''brings the price doWn.''
And during a good bear trend , make money buy buying inverse, not selling first.........Not anything that i or you wrote is new.

 

[ktm]

Years ago - not sure if this still happens - there was a process called "Private Investment for Public Equity" (PIPE). An investor could loan a company money in return for below market priced shares. As a hedge, the investor could then short a huge amount of shares, drive the price down and literally take over the company. This is a brief oversimplified version.

We used to track this stuff and react accordingly. Everyone called it "taking the pipe" and it was usually a hail mary near the end.

And yeah...perfectly legal and happened quite frequently.

EDIT: Here's a more detailed explanation from the interweb.

https://www.investopedia.com/terms/...ying of,and other large, accredited investors.

 

[maxinger]

Your mind is now badly contaminated.

Go do deep mind cleansing.
Then you will know how to short it.

 

[Dr_Trade]

Maybe you heard it from someone in federal prison jailed for stock manipulation.

So you "buy" shares at a discount by giving . money to the company and then short shares in the market and when the stock drops you make money on the short shares but lose.money on the discounted shares..these are 2 separate transactions.

If not separate then the selling short is actually selling the discounted shares at a profit and i find it hard to believe a company would give shares with no sales restrictions.

uh...

Yaah absolutely correct

 

[athlonmank8]

I came to hear about a new shorting technique wherein you give cash to distressed companies in exchange for their shares at a discount. Then you short sell its shares to bring prices down and profit from the fall. I may be a bit off about the exact details. Anyone knows the name of the technique?

Happens all the time. Usually shorted before the financing is announced

 

[zdreg]

Maybe you heard it from someone in federal prison jailed for stock manipulation.

So you "buy" shares at a discount by giving . money to the company and then short shares in the market and when the stock drops you make money on the short shares but lose.money on the discounted shares..these are 2 separate transactions.

If not separate then the selling short is actually selling the discounted shares at a profit and i find it hard to believe a company would give shares with no sales restrictions.

uh...

Years ago - not sure if this still happens - there was a process called "Private Investment for Public Equity" (PIPE). An investor could loan a company money in return for below market priced shares. As a hedge, the investor could then short a huge amount of shares, drive the price down and literally take over the company. This is a brief oversimplified version.

We used to track this stuff and react accordingly. Everyone called it "taking the pipe" and it was usually a hail mary near the end.

And yeah...perfectly legal and happened quite frequently.

EDIT: Here's a more detailed explanation from the interweb.

https://www.investopedia.com/terms/p/pipe.asp#:~:text=Private investment in public equity (PIPE) is the buying of,and other large, accredited investors.

Correct. Shares were sold in Europe at a discounted price and were not registered for sale in the US. and I believe did not show up on the US balance sheet. Then the buyer would short shares in the US. Over time those shares would become eligible to be traded in the US. Those cheaply European bought shares would then be delivered against the short shares which had taken place at higher prices in the US.

 

[schizo]

I came to hear about a new shorting technique wherein you give cash to distressed companies in exchange for their shares at a discount. Then you short sell its shares to bring prices down and profit from the fall.

Is this a hedge? Why the hell would you go in long and short at the same time?