Stock-manipulation-schemes by hedge funds
”If your are attracted by potentially breakthrough technologies, you will inevitably get caught up in a manipulation that leads to a suddenly plunging stock price of a company in which you are invested.
Invariably the scheme starts with and is perpetuated by a flurry of blogs, tweets and message board comments which proclaim that the technology is worthless; management is a band of liars and thieves; Each year this scenario is played out hundreds of times.
This carefully scripted and long used manipulation scheme by short selling hedge funds is all meant to shake and then break investors’ confidence. The result is usually a painful, steady, day by day erosion of the stock price due to naked shorting practices. Stocks can be cut in half by naked shorting on the basis of little or no change in fundamentals.
If you are going to invest in this area, you must decide when this occurs whether you believe strongly in the Company and can ride out the storm or want to cut and run. However, sometimes it happens so rapidly that the latter is not an option. On the positive side, these manipulations can often lead to some excellent investment opportunities if the fundamentals remain intact, investor confidence returns and the shorts are forced to cover.
Does this sound familiar to FPC sekten?
Suddenly and without a major change in the fundamental outlook, an investor sees stock prices cut in half in a short period of time. During this time there was invariably a steady day by day price erosion (naked shorting at work) accompanied by an unending stream of contrived negative news flow that was demoralizing to other investors.
In order to give more insight into what a naked shorting attack might look like, here come the predictable elements of a typical attack:
Shorts like to target emerging technology stocks that are engaged in high risk development and are not widely covered by quality research analysts.
• The initial and subsequent attacks are almost always triggered by some news event. Obviously, the shorts seek out negative news or an event that creates uncertainty. However, sometimes an attack can be based on a positive news event which the shorts spin to make it appear negative.
• Using the ready platform afforded by the internet and social media, a blogger associated with the shorts goes to work with a negative interpretation of an event. These are usually not sophisticated analyses and are usually limited to one or two pages of text which is invariably one-sided and unbalanced. These are meant to provide “intellectual” reasons and cover for the short attack.
• The most prominent of these bloggers usually have no backgrounds in technology analysis or expertise in the science. In many cases, it seems hedge fund employees actually write the articles which are cut and pasted into the comments of these bloggers.
• The heart of the naked shorting scheme involves a group of hedge fund traders conspiring to steadily knock out offers for the stock and to trigger stop loss orders (This is explained later in this report). This is called walking the stock down. The power of these conspiracies is striking and in many cases allows the shorts can largely determine the price that they want the stock to trade at.
• The stock weakness gives legitimacy to the contrived negative blogs. The idea is to create fear and uncertainty among investors by making all news events appear to be negatives and to fabricate new issues that the shorts hope will demoralize investors.
• The first time one comes up against this, one assumes the blogger was someone who was just more cynical about the chances for success and had an opposite point of view from yours. This is understandable and common in research analysis. So you maybe write a respectful rebuttal to their argument.
• One assumes that after a good counter arguement, this would end the discussion. You had expressed your opposite points of view, would respectively disagree and move on. This assumption is wrong.The situation quickly escalates. and, the blogger accuses you of being stupid, deceitful.
• Negative articles keep getting written. Usually, they were timed to a press release and regardless of the news and without exception each was interpreted as a major negative. A major strategy was to argue that management was lying to investors and manipulating the stock.
• The stock would go down on good news, bad news and uncertain news. One of the pillars of stock manipulation is to make good news appear to be bad.
• The Basher bloggesr are indifferent to truth and actually would make up information that was factually incorrect. When made aware that the information was wrong, he/she would ignore it and even repeat it in later blogs.
• There are a number of bloggers who participate in these attacks. Many of these bloggers appear to work together and coordinate their negative attacks. It is striking that many of these people have connections to one another. Many of them were trained at a well-known blogging site that was founded by hedge fund people.
• Sophisticated use is made of the Internet and social media. Twitter is used to signal that an attack has begun.
• Shorts are well connected to mainstream media and are adept at getting them to unwittingly participate in the scheme.
Seeking Alpha has become very friendly to articles supporting short selling and is used extensively by the hedge funds. The site actually promotes as one of its favorite authors a person who writes only negative attack article on companies in which he claims that managements are lying and paying authors who have a positive view on the Company. In his disclosure, he states that he shorts stocks, then publishes a negative article on Seeking Alpha and states that he may cover immediately after the article is published. This seems to meet the definition of a pump and dump scheme. He also acknowledges that he is collaborating with other short sellers. I think they contribute the information for most of his articles.
• Seeking Alpha allows articles to be published by anonymous authors. These articles are often extremely bearish and are almost certainly written by people at hedge funds.
• Hedge fund create pseudonyms and publish on a daily basis negative comments on message boards like Yahoo and Investor hub.
Note: Verite asked me to publish this since he was impressed that more and more FPC Investors seem to be aware of this hedge fund strategy. He got banned from Placera when he pointed out the Connection between certain so-called analysts and the timing of negative articles too often. :)”
Inlägget är taget från forumet Placera, se länk:
Idag så har media letat fram information som skall påverka negativt. Nu skall FPC återigen se sig hotade av EgisTec och Synaptics trots att deras produkter oftast väljs bort av smartphone-tillverkarna. Samtidigt så spås smartphone-marknaden stanna upp jämfört med tidigare, men man bortser helt från att samma marknad nu implementerar fingeravtryckssensorer i samtliga produkter (Low–High-end) och att Indiens smartphone-marknad växer kraftigt. Man blir lite trött av dessa körningar av media, och dagens ihärdiga bombardemang från media bekräftar texten ovan.
Den röda tråden om en manipulerad aktiekurs lyser tyvärr starkt idag = tragiskt!