TLRY

[Daal]

You raise some good points - thanks for your perspective.

On a related note, I am wondering just how strict lockup periods are? Are there any administrative restrictions that prevent insiders from selling during a lockup period?

https://www.cnbc.com/2018/09/19/pot...ets-a-boost-from-its-big-stake-in-tilray.html
"Seattle-based Privateer Holdings has at least a 76 percent stake in Tilray, according to FactSet."

(Obviously this refers to the total shares outstanding and not the float.)

Surely if you were the portfolio manager of this fund you'd be wanting to sell at least some of your holding as TLRY went above $200, $250, $290 ...

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In this case I believe there are even more restrictions because Privateer is an "affiliate", that is, a more than 10% holder.
http://srfkllp.com/blog-rule-144-ho...can-navigate-the-affiliate-sale-requirements/

This is why Buffett (and most big players) try really hard to stay under the 10% threshold ownership percentage (and why 9.99% stakes are typical). There are a lot of volume restrictions in the selling once you become an affiliate

 

[Daal]

"Trading Volume Formula. If you are an affiliate, the number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing of a notice of sale on Form 144. Over-the-counter stocks, including those quoted on the OTC Bulletin Board and the Pink Sheets, can only be sold using the 1% measurement.
https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html

Using SPY as guide, it trades about less than half of its outstanding shares every week. So the 1% of outstanding shares would prevail. Since Privateer could sell only 1% per quarter, they would need 76 quarters to liquidate their stake, ouch!
But there might be exceptions to the rule and sometimes weekly volume could spike up

 

[TrustyJules]

You can put conspiracies away - the problem is the small float from the IPO. With most shares locked up with the institutionals there is not enough shares to go around. The mistake of the exchanges was to open options trading on the stock with such a low float. This attracted a multitude of people trading a multiple of the open float - of course this is causing problems and squeezing the stock. The overnight borrowing rates for TLRY are crazy - one person who was short was charged 5000$ for holding 3200 short shares overnight. Put IV is a multiple of call IV and the volumes on options market are out of control.

 

[m22au]

You can put conspiracies away - the problem is the small float from the IPO. With most shares locked up with the institutionals there is not enough shares to go around. The mistake of the exchanges was to open options trading on the stock with such a low float. This attracted a multitude of people trading a multiple of the open float - of course this is causing problems and squeezing the stock. The overnight borrowing rates for TLRY are crazy - one person who was short was charged 5000$ for holding 3200 short shares overnight. Put IV is a multiple of call IV and the volumes on options market are out of control.

I think the options requirement is 7 million shares in the float.
https://www.investopedia.com/ask/answers/04/072104.asp

Whereas Tilray has 10.35 million:

PR of July 23:
https://ir.tilray.com/news-releases...nces-closing-initial-public-offering-and-full

TLRY Prospectus index
(https://www.sec.gov/Archives/edgar/data/1731348/000119312518221552/0001193125-18-221552-index.htm)

TLRY Prospectus link
(https://www.sec.gov/Archives/edgar/data/1731348/000119312518221552/d545137d424b4.htm)

If having options available for TLRY is a "problem", then it follows that it's also a "problem" for other companies with 10.35 million or fewer shares in the float.

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[TrustyJules]

Thank you for the administrative data post it misses the point of the 'problem' completely. Your numbers are also off - there is 17M float available. 30% has been sold short already.

Just check the open interest on JUST the Sep calls. There is 15,700 call options open and an equal amount traded which is for over 1.5M shares just about 10% of float just on the calls ending next week. In reality more were traded as those ITM have a tendency to get executed. Under such conditions is it any wonder the stock is moving all over the place?

It remains a small float and options tend not to be traded in such numbers on such small stocks. Here however the lunatics have taken over the asylum and are trading in volumes. No conspiracies are needed for the volatility of the stock price, its just driven by the options market.

 

[m22au]

Thank you for the administrative data post it

You're welcome

Thank you for the administrative data post it misses the point of the 'problem' completely.

I haven't missed anything. In your previous post, you stated that it was a "mistake of the exchanges ... to open options trading on the stock with such a low float". If the minimum requirement is 7 million, and there are (at least) 10.35 million shares in the float, then why is the choice to permit options trading in TLRY a "mistake" ? The exchanges have simply followed the rules that are in place.

Your numbers are also off - there is 17M float available.

Apart from your ipse dixit, do you have a source for the 17 million number?

It remains a small float and options tend not to be traded in such numbers on such small stocks.

How do you define small in the context of "small float" and "small stocks" ?

Even at a share price of $100, and a 10.35 million float, this provides a freely-floating market cap of over $1 billion, which isn't particularly small compared to other newly listed companies.

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[TrustyJules]

Float:
https://www.barchart.com/stocks/quotes/TLRY
https://finance.yahoo.com/quote/TLRY/key-statistics?p=TLRY

Greenshoe was executed - your information is from the original SEC filing no big deal.

As I posted on the thread regarding this stock in the Options forum, the small float is a problem when you have options traded. Options have leverage and they can be created regardless of available shares - the way Market Makers neutralise their positions frequently involves shorting shares. Here we have a stock who trades its full free float on an average day on the stock market and on top of that a multiple of the free float in options.

This is pure market economics - lots of demand little offer and so prices go all over the place as they have done.

You can quote the minima all you like for what it takes to be an optionable stock those are minima that did not consider people going crazy over a stock like happened here. I will concur that in most cases its fine but then such small float stocks tend to have options traded in the low decimal digits or not at all.

 

[nillionaire]

Nice afterhours spike to short into tomorrow.

 

[vanzandt]

Any of you that are playing this thing long or have some kind of option play set up... you might want to know that the IPO lockup on this pig expires 1/15.
That's usually good to know on stocks like this... figured I'd point it out.

 

[jonahern]

Any of you that are playing this thing long or have some kind of option play set up... you might want to know that the IPO lockup on this pig expires 1/15.
That's usually good to know on stocks like this... figured I'd point it out.

thanks for the heads up - was in and out last week with the crazy option prices - but interested to see how it plays out.