mike, it is only my opinion, what I say and what anyone says for the matter on HC, should be understood with a dose of sceptisim. I only post what I believe is a possible explanation and I am a simple investor without any special information of any kind (but you should be suspicious not knowing who I am - as with everyone!)
Take a good look at the change in substantial holder notice 20 August. That notice states the related parties UBS have borrowed shares from. It is quite revealing.
Now, I don't know but.... a company with a culture that supports manipulation of Libor and currency [google UBS fraud manipulation] may be capable of anything. So where it ostensibly has exposure to all the shorts it has borrowed and now sold we don't know any private arrangements it may have with associates. That is where I am coming from with long and short accounts.
There has to be a buyer for every sale (of course). So who is soaking up all these short sales. Retail will have dabbled no doubt but that would have been a minuscule of the volume traded over the past five months - with such uncertainty, and inside finance industry knowledge of what the shorters are doing, I don't think much buying would have come from professional fund managers. My suspicions are that a number of entities are supporting the buying of stock and adding to the pressure through selling/buying/selling etc. I wonder if these entities have an association with UBS and some sort of arrangement to 'settle the bill' at the end of this episode.
For what purpose if ultimately one or two large shorters have an interest through association with both sides of the trade - would't that nullify the gain? Clearly it enables price control and the share market being a zero-sum game means that there has to be a loser for a winner - those who sell under pressure not to return or sell at a loss only to buy back higher at a later date are the losers being targeted.
When will it end? Who knows, could be a week could be a year. I believe it will continue until some other large force decides it is time to get involved. Shorters will know when a new 'big' buyer enters the fray (before they actually enter) and they will then do an orderly close of shorts in association with those holding long accounts.
How might that play out. Well as the SP rises rapidly, associated long accounts flood the supply side keeping the SP contained. In the wash up associates supporting the strategy with 'out of the money' long accounts will be compensated in some way.
It is likely little pressure is currently on the shorters. A large number will have been placed in the first leg down so the average holding maybe something in the region $4.50 - $5.
All speculation on my part - I think the pattern of trading over the next couple of months will tell the story.
SGH Price at posting:
$3.07 Sentiment: Buy Disclosure: Held
