What if I am a very large multi-national hedge fund and I already hold a substantial number of shares in a profitable emerging global industry. The goal is to make money and increase my holding, so how do I do it at the price I want to pay.
1) Loan out the shares I already hold to second tier brokers along with research that says the price is going down in the short to medium term, I now still get my dividends as well as a shorting fee.
2) The second-tier brokers then on sell this to their clients as a great way to make extra profits at little risk to themselves and they have the inside info from a great source, if this goes belly up the brokers go "that is the market" and, in the meantime, they are still getting their transaction fees. This becomes very popular and starts to take on a life of its own, but that's not my concern as it just makes it better for me.
3) I then slowly hover up all the spare shares that are floating around at the price I want to pay, while getting my dividends and a loan fee for the shares on loan.
4) I know the industry is in a massive growth phase and that the US government is going to throw billions of dollars in that direction and national interest is at stake. Even if new deposits are discovered it take time to bring them up to speed and in the meantime, demand is only going to grow, so my long-term investment is only going to grow.
5) When the shit hits the fan, I don't lose because I call in my shares at the borrowing price regardless of what the second-tier brokers have to pay and, in the meantime, I have increased my holding at my price. Let the devil take the hindmost.
Anyway, that's just my Saturday thoughts. have a great weekend.
PLS Price at posting:
$3.51 Sentiment: Buy Disclosure: Held
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