UVN being manipulated ??
- Thread starter krazykarl
- Start date
I really haven't looked at the stock. I just know if it's SHO something is bad wrong. Gary Weiss, Greenberg, all those schmucks, including Cramer, say it doesn't matter. But you you have fake supply, your demand is satiated, and the stock doesn't act correctly. As a trader, you study the supply /demand continuum, and it's being used as a weapon. Just keep selling and driving it down, or at worst, maintain the price, and, I was astounded to hear this, "hope something goes wrong with the company". No kidding, I was told that. Hell of a strategy.
About the tenth time you buy support and sell resistance and get your ass handed to you, you learn. I try to stay away from if I can.
My advice to you is move on, and don't get involved in this stuff again, unless you have an edge. That would be, somebody is going to buy them in, and that does not happen.
That's a fail list from 15 months ago. It's typical of people that are convinced the whole world is out to kill "their" stock to post something like this. UVN is not currently failing, according to the threshold lists from the last two weeks, and can be easily borrowed in size from a number of firms.
The takeout bid is 36.25. The current narrow trading range reflects the narrow range of consensus of the merger arbitrage community about the likelihood of the deal going through. That is, the time value of money to hold the position between now and the estimated date of merger, plus the small estimated percentage chance of it failing is about 7.8%. If you see "big" blocks print, it's often because the arbs have a tight collar on the price that they're willing to sell or buy based on their failure estimate. The block trades when one arb disagrees with another arb or the public. Look at where the blocks are actually trading. If it's printing on the third market ('S' exchange ID), and you don't see it on INET's print list, it's coming from one of the block-crossing platforms (e.g. Pipeline).
If it's happening on the NYSE itself, look at any other major NYSE stock for similar action. When it becomes apparent that someone has a large block for sale, the quote will gap and prices will ramp down until you see the big block prints. Same thing in reverse for a buy. There is no reason, just from the price action, to think that this represents a short-sale. In fact, I'd guess that most institutional-size trades in a given day are not shorts, or are short only for the temporary purpose of facilitation of a buyer. The only thing that is usually a sign of a short is when you see a large offer for a non-uptick-exempt listed stock stepping down in price to a penny above the last sale (or the bid in the case of NASDAQ stocks). Note that this is not the case for UVN, which is uptick-exempt - they can short at will. Also, for NYSE stocks, I think this stepping-down can indicate that the spec is trying to short or sell from his own inventory, and is prevented by exchange rules from creating a minus-tick, though this will usually go on for much less time (much less size) than a short.
If you think UVN is priced too low for the risk, buy and then tender it. It's that simple. You're probably wrong, though. The merger arbs are pretty good. It's unlikely that you can outplay them unless you have access to inside info.
thanks for taking the time to write that up - definately took some useful information away from it.
could you speak to the price-action though? specifically, after they released earnings, the spread immediately increased, with a bid of over 34.50. the bid was subsequently squashed and I saw all the asks that were more then 0.20$ from the close taken out. to my inexperienced brain, it makes sense that there were shorts on the limit book waiting to take out those high asks.
1) is this manuver kosher - if it's naked?
2) does it happen often?
First, I must correct my previous post. UVN has, indeed, been on the threshold list for some time, indicating failures to deliver. I must have been looking at 2005 instead of 2006. There may, indeed, be naked shorting going on here, though I doubt it affects the price much. Sorry 
I will mention again, though, that it can easily be borrowed in size from three places I checked, and I'm pretty sure that those places do have inventory or they would not risk it.
Erns came out after hours on 08/03. Presumably, people bid it up not realizing that there was already a merger in the works, which happens sometimes. Arbs hit those bids to pin it right back to ~33.50 again. I can't speak to which book or which orders you were looking at, but none of it matters. Like I said, the arbs have the thing collared very tightly (+/-~$0.10) around 33.50. Barring any news that affects the odds of a successful merger, they will sell to any bids above about 33.60, or buy from any offers below about 33.40. This price will drift upwards (because of decreasing cost of carry) over time.
BTW, my chart shows only 200 shares traded at 34.50 on ARCA at 08/04 08:57:xx ET. There may have been trades elsewhere or at different times that do not get into that particular chart data.
If you own short-dated calls, you're in trouble, since the deal is not expected to close until Spring 2007 (at least according to the initial press release). At least 3-4% of the current ~7.5% discount is from cost of carry.
I will mention again, though, that it can easily be borrowed in size from three places I checked, and I'm pretty sure that those places do have inventory or they would not risk it.Erns came out after hours on 08/03. Presumably, people bid it up not realizing that there was already a merger in the works, which happens sometimes. Arbs hit those bids to pin it right back to ~33.50 again. I can't speak to which book or which orders you were looking at, but none of it matters. Like I said, the arbs have the thing collared very tightly (+/-~$0.10) around 33.50. Barring any news that affects the odds of a successful merger, they will sell to any bids above about 33.60, or buy from any offers below about 33.40. This price will drift upwards (because of decreasing cost of carry) over time.
BTW, my chart shows only 200 shares traded at 34.50 on ARCA at 08/04 08:57:xx ET. There may have been trades elsewhere or at different times that do not get into that particular chart data.
If you own short-dated calls, you're in trouble, since the deal is not expected to close until Spring 2007 (at least according to the initial press release). At least 3-4% of the current ~7.5% discount is from cost of carry.
Quote from alanm:
First, I must correct my previous post. UVN has, indeed, been on the threshold list for some time, indicating failures to deliver. I must have been looking at 2005 instead of 2006. There may, indeed, be naked shorting going on here, though I doubt it affects the price much. Sorry
Erns came out after hours on 08/03. Presumably, people bid it up not realizing that there was already a merger in the works, which happens sometimes. Arbs hit those bids to pin it right back to ~33.50 again. I can't speak to which book or which orders you were looking at, but none of it matters. Like I said, the arbs have the thing collared very tightly (+/-~$0.10) around 33.50. Barring any news that affects the odds of a successful merger, they will sell to any bids above about 33.60, or buy from any offers below about 33.40. This price will drift upwards (because of decreasing cost of carry) over time.
BTW, my chart shows only 200 shares traded at 34.50 on ARCA at 08/04 08:57:xx ET. There may have been trades elsewhere or at different times that do not get into that particular chart data.
If you own short-dated calls, you're in trouble, since the deal is not expected to close until Spring 2007 (at least according to the initial press release). At least 3-4% of the current ~7.5% discount is from cost of carry.
again - thanks for taking the time. i have learned a lot from these few posts.
-kkk