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Martin Shkreli Sets Out To Crush KaloBios Shorts: Will Stop Lending Out Shares
The brutal tragedy of at least one KaloBios short seller was first documented a week ago when we noted the margin call massacre that befell "novice" trader Joe Campbell, who went to bed with a $35K short on Wednesday and woke up with a $106 margin call the next morning after it was revealed that a "consortium" led by Martin Shkreli had taken an unknown stake in heretofore insolvent KBIO.
However, the story did not end there because the very next day we got new information that Shkreli had not bought just any amount of KBIO shares but a whopping 70%, which got us thinking: is the "most hated man in America" contemplating to unleash a Volkswagen scenario, in which he has acquired enough shares to leave more shorts outstanding than there is actual float, and then one day to simply pull all the borrow by no longer lending out shares to potential shorters.
This is what we said last Friday:
In other words, Shkreli's consortium had acquired 70% of the company, and should they decide to pull the borrow, on the odd chance that the short interest had soared to above 30%, KBIO - which until a few days ago - suddenly has the potential to become the next Volkswagen: a company which has more shares short than there is float available to cover them.
We added:
What happens if Shkreli's plan is indeed to rerun the "Volkswagen" scenario and unleash an epic short squeeze that sends the price of the company into the stratosphere, unlinked from any fundamentals, but merely soaring ever higher as desperate shorts pay any price just to get out.
We hope to find out as suddenly this until recently bankrupt company whose price has exploded in the past two days, has become not only a poster child for everything broken and manipulated with the market (think 2014's CYNK one year forward) but has the market following with morbid fascination to find out how the tragicomedy of "Shkreli vs the Shorters" concludes.
And then two days ago, when it was still unclear just what Shkreli's intentions are, but when the stock had already soared well into the $40-range, we again warned that "if [Shkreli and friends] pull the borrow and demand delivery, there will simply not be enough shares outstanding to satisfy all shorts, leading to, drumroll, the next Volkswagen."
Oddly enough, there was a radio silence from Shkreli who supposedly had mentioned he had no intention of demanding share delivery, which made us wonder if he was merely waiting for the right moment to strike.
Then something caught our attention: last night Bloomberg reported that according to Markit, the short interest in KBIO had soared to 49% of the free float from just 5.6% on Nov. 16.
Surely, if there was any trigger to push Shkreli to demand delivery, this would be it.
And, not unexpectedly, this is precisely what he did earlier today.
I spoke with my counsel & advisers and decided to stop lending my $KBIO shares out until I better understand the advantages of doing so. 1/2
— Martin Shkreli (@MartinShkreli) November 26, 2015
I apologize for any inconvenience this may create in lending markets and I will probably resume lending at some point. Happy Thanksgiving!
— Martin Shkreli (@MartinShkreli) November 26, 2015
And now the squeeze really begins, as all those 49% who are short KBIO, according to Markit, rush for the nearest exit, while those who are currently long the stock refuse to sell at any price knowing they have all the leverage.
Whether this will translate into a Volkswagen circa 2008-type scenario, which incidentally looked as follows...
... and where a company which is for all intents and purposes bankrupt suddenly trades with a market cap in the hundreds of millions or even billions as desperate shorts pay any price just to get out.... tune in tomorrow to find out during tomorrow's abbreviated session, because the KaloBios comedy is nowhere near concluded.
As for Shkreli... well he is already the "most hated man in America" - might as well double down.
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sorry but i have no sympathy at all for anyone who sells something that isn't theirs. doubly so i have no sympathy for anyone who borrows shares of a small company and then gets their tit caught in a wringer. fuck 'em.
You are 100 percent right. This is a text book example of a short squeeze.
GOTTA LOVE TO HATE THIS FRATBOY GENIUS!!!
Its amazing how this mother fuckin Jew can still be around in the industry after all the shit hes done.
http://nationalvanguard.org/2015/09/jewish-ceo-of-turing-pharmaceuticals-drives-up-price-of-medicine-for-big-profits/
OMFG!!! Jewish??? That's almost as bad as being 'ethnic'!!!
What is it with the religion haters on this site? I have no love for this guy, but dislike what he did, not his faith. The same can be said for muslims. If they are peaceful citizens of this world, god bless them. If they are haters, who want to kill for regious reasons, they are no better than "Divided Sates" and his racist friends. We should find a "special" place for all of the haters.
But it's certainly not gambling. No way! Not gambling at all.
EFUT is the one to watch tomorrow. 51% bought buy large china company 4m float was up 150% after hours. The company that bought EFUT just got a $450m investment from BABA likely buying its entrance into Nasdaq
Then you have no idea how much the market relies on shorts. Each short position creates TWO longs.And if you don't understand that then next time do your homework first before spouting off.
I understand how shorting functions and still share his opinion.
Shorts are nothing but financial parasites, but then again so is most of Wall Street (and all other world's markets).
You said market. nigga please.
The thinnest Friday of the year, and a "short" day, at that. Gotta admire his timing--if nothing else.
… These 21st century Robber Barons
have done their great-grandfathers proud !
What I also admire is he took the time to write two tweets to explain his thoughts. With character limits, is twitter now how we communicate? It takes multiple posts to get a point across. Maybe a smart, young, entrepreneur with silicon is his veins will come up with a revolutionalary idea to expand the number of characters from 140 to 280 in a social media website. Call it Twitter2X or TwitterDeux.0. Then, only then, we can start to harness the power of social media.
I thought the float wasn't large enough to reverse the trade. I guess he could use options, but that's pretty tricky.
My guess ,is that he's got a group aligned, after he buys calls and smothers the float. [ those trigonometry] courses eventually 'pay off'.
Yeah, in the meanwhile he 'owns' a biotech company and all the joys of ownership that come with it. For a trade house, to be asset rich and cash poor is a lousy place to be. Playing with options and he's in a situation of then possibly losing what he made in his run to the remote possibility of options expiry. ( Would you buy anything on the option board tied to KBIO understanding that you are improving competing trader's float with the full understanding you would just be holding his bag? Nope. )
No options in KBIO.
stock options and warrants un~exercised and out of the "holding period" could be used as collateral.
The divestiture window for underwriters, is generally shorter than the " black out " period for corporate CEO's, so that the major share holders are protected, if the leadership has other intentions, or pro/forma returns aren't met.{ Board of Directors}
And that should read $106,000 margin call! I've heard reports it was $144k on a $37k short position.
This turd was trading for 44 cents.
Why am I so amused by this? Something about a trader making his bones on death, and getting clobbered in the process.
Happy Thanksgiving!
Screw these guys...if this 'trader' was on the other side of the trade, he would be walking out with a smile to get get him some blow and hookers for the rest of the year. Time to pay the piper jackass!!
Well played. Well played. Can we get this Shrek interested in Gold next ??
Translated: He can't find anyone to unload the shares he just trapped his company in because there is no market to sell back to.
He bought it for the shell... an already IPO'd BioTech company that he can simploy move his patents and existing drug to. He bought all the shares at $0.60 or so...
If that's his angle, he's brilliant.
And a bonus on the play! Ouch.
Or in trouble. In a market that's saturated with companies with established brand names, a roster of already available options, lots of data and a medical sales forces that are already established across the industry? It's a far cry from being Pfizer. He's got two directions that are possible here:
1) If he's buying a company to groom it for sale he's paid too much for the effort.
2) If he's in that place of buying a company at any cost by any means, that's just asking for trouble. Borders on gambling.
On list of startups, other than dot.com company, the half life on a pharma company is pretty short. Especially on a one trick pony. It is funny though that he's routing the shorts on it. With the guy last week looking for help covering his margin call, you'd think with the writing on the wall with the trade setup no one would be dumb enough to keep throwing gasoline on the fire for him.
Signs off with "Happy Thankgiving!"
Priceless.
This guy may understand the mechanics of theft, but he sure seems to be deficient in understanding human nature; i.e., someone is surely just going to end this guy. Can't imagine this ending any other way.
I personally love watching him in action.
He is a unique mind and a breath of fresh air.
Flaco, are you him? Playin wit us?
No, I am not he.
I am truly just an observer from a far...
Impressed at the research and technique... especially for his age.
Finding an ancient drug, buying it on the cheap, and then porking the price to levels that would make Valeant blush.
Then finding a bankrupt BioTech to wrap up existing and future stuff into without having to go through the IPO process... bonus points: small float and a bunch of moron shorts looking to milk the last $0.60 out of short.
I LOL'd when I saw that morons left trades open hoping to dance on the grave of KBIO and then had everything blow up in their faces for SIXTY FUCKING CENTS.
The price goes to the moon on KBIO, he waits patiently for a new round of masochists (shorts) to come into the symbols, and then he pulls the shares.
We will see many more things from him... each one will be a bigger ass raping than the prior.
Bravo. Well played.
Best part to watch:
This stock goes moonshot.
He sells 10-20% back into the market. Makes a Yuge profit.
....and catches another net full on the next round .
You know when it goes off, a certain few will just not be able to resist.
Or is my understanding of the mechanics skewed ?
Brilliant? Sure. Evil? Of course, but stupid. Becoming a mainstream villian isn't a good place to put yourself.
He is a dick in sheeps clothing....
Just remember, this is not a casino, it is a fair market where people invest long term for retirement and to preserve their capital. *cough*
Now we can all see why NIRP is acceptable...accidentally on purpose.
The Fed will buy them at the top of the mountain
lol..."I apologize for any inconvience this may cause to the lending markets and I probably will resume lending at some point."
But for now (being a former hedge fund manager, not knowing the complexities of lending out my shares...and he said it with a straight Twiiter face...lol) I'm going to crush some shorts, make myself a tidy little profit on a bankrupt as shit company and then go Christmas shopping...on the advise of my counsel & advisers of course ...is that what the fuck I'm reading here?
It's just a good humaneered stawk therapy session I suppose...lmfao!
I wonder if he has good security, and stays the fuck out of Home Depot?
If I were him I'd be hiring a PI to find out if his "counsel & advisors" had recently purchased nail guns at Home Depot. It wouldn't even cost him a penny.
He could pay him in company stawk ;-)
You are 100% right, he truly has all the short sellers by the balls. now they will be squeezed.
You know a nation is no longer a superpower when a Shkreli isn't being pounded by Bubba in prison.
The greedy shorters sold this company short to put it out of business, they they are caught in beartrap. No problem, I learned long ago from reading what Commodore Vanderbilt did to Jay Gould, I decided to never sell short or buy on margin. It has worked well for me. Shkreli is killing them and I really don't care, they sold the shorts.
I care and I think it is a beutiful thing.
We all know Shrekli is a giant greedy cunt.
And what's a market shorter?
Hell, they don't even buy the fucking paper, they borrow it!
Edit, I'm not disagreeing with you, Klink.
Agreed. But this douche buys a patentless drug and jacks the price purely out of greed. That's a special kind of zionist low.
Yes, but also stupid. No patent mean that any competitor can go in and take him out.
Maybe he was doing it to cause a big controversy that would then turn into a huge Short-A-Paluza.
Never underestimate the greed of a Jew,
Fucking Barbara Streisand put out a Christmas Album!!!!
You're confusing the Sheikh, with the Shekel, my friend.
No confusion here, and I'm sure Shkreli knows the sheckel well.
Watch your pennies and the Shkelis will look after themselves.
I read the Tweet thread. He is actually interacting with the commoners.
Called one dude's bluff on a bet.
I don't have a picture of the size of the shorts, but there may be a jumper or two tomorrow.
It will be fun to watch fo everyone else. Seems these opportunities don't come round too often,eh?
I don't know but I'm sensing some sort of 20 maybe 30 floor fall for this guy. If anyone knows where he moved to put out a video camera so we can see the impact and red concrete sidewalk. That clip would make some serious cash. Headline: "Dead cat bounce."
I fully expect this guy to be found lying in a pool of his own blood any day now. Total parasite POS.
When he is killed by millions of nail guns, I hope to find out where he is burried.
I will open up a company that charges to allow people to piss on his grave.
"Total parasite POS."
Like "father" like son: Jim Cramer, the other dead man propagandizing--until the next crash...
Can someone please do this for 'paper gold'?
Anyone so fucking dumb as to jump into shark infested waters with a few minnows swimming about thinking they can dive dive in grab a tidbit before a shark grabs them is almost beyond belief.
Greed and thinking they know it all and fucking bravado gets your legs chewed off.
When the fucking sharks are starving and insane and the maddest motherfuckers in the entire ocean trapped in a swimming pool and you jump in you are gone.
This shark will get his fill of the dumbest bunch of greedy assholes thinking they can make a quick buck in a generation.
I bet you some dumb fucks even now will figure they can go long and then feed of the shorters by selling higher still.
Honestly I can feel them lining up at the side of the pool with flippers on, and the dumb cunts have no clue that they are being invited to become the next course
"until I better understand the advantages of doing so." WTF, guy runs or ran a hedge fund and does not understand the advantages of "doing so". He should run for President.
The irony, eh? He understands.