Thursday, March 6, 2008

Naked Short Analysis - LDK

I'm not sure how to interpret these charts ( See)

I guess that the first obvious point is the fact that data was missing from the days immediately following the Situ Event. What this says to me is that there is something there worth hiding. LOL! One day maybe we'll know what the Naked Short Selling Spike looked like at this time, but it will probably take a lawsuit to discover that data.

I'll say that I'm suprised by this data. This is of course assuming that it is accurate (though the SEC won't guarantee it).

I believed that there would be many more Naked Short Shares outstanding throughout the low period between October and December, but it seems that they were mostly able to cover prior to the 11th of October. Of course, this data doesn't show daily volume of Naked Short Shares, it only shows the end-of-day snapshot of the number of Naked Shares Outstanding.

It has been quite clear that the powers that be have been using everything that they have at their disposal to knock down any potential break-out moments.

So, what happened in December?

It's unclear, but I think it can be assumed that whatever happened, those doing the Naked Shorting were out to make money. Though the level of Naked Shorts were under a Million on average prior to the December rally, Covered Short Interest averaged around 7,350,000 shares, and peaked around 8,934,265 shares on 12/14( See). Covering those shorts at over $70 per share would have been quite expensive.

I've gone back and forth. I simply can't come up with a scenario using the charts, where "they" made any money off of naked shorting in December, or even really manipulated the price. According to the data, after the initial runup in Naked Shares, the number of Fails decreased as the price continued to rise, and was mostly covered prior to or during the fall from the top. That's a money loser for anyone who sold short near the bottom, unless they already had shares to cover with from the time prior to the spike. The growth of Fails in the early stages of the spike would have buffered the early rise, but to my mind, seems pretty insignificant.

Any thoughts or suggestions are welcome!

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Anonymous said...

in regards to this naked short issue I am just confused.

Analysis the LDK data from the SEC makes one wonder. I checked with the SEC but they do not discuss anything on the phone.

Can you help me out. How come we had 20 days out of the entire December Fails? How do they work?

this is the data for the days Dec 12, 13 and 14, 2007:

Date/Fails/Stock Volume/Percentage

Thanks for your help

D Pickard said...

I'm not sure what you mean: "How come we had 20 days out of the entire December Fails? How do they work?"

Are you talking about maybe 20 trading days?

As for how they work, here's my writeup:

Anonymous said...

Yes, I talk about trading days. Here is the complete data from the SEC:

20071203|50183L107|LDK|667395|LDK SOLAR CO LTD.|29.55
20071204|50183L107|LDK|1168278|LDK SOLAR CO LTD.|32.30
20071205|50183L107|LDK|1765168|LDK SOLAR CO LTD.|40.97
20071206|50183L107|LDK|2908702|LDK SOLAR CO LTD.|42.03
20071207|50183L107|LDK|3292995|LDK SOLAR CO LTD.|40.42
20071210|50183L107|LDK|3082736|LDK SOLAR CO LTD.|45.75
20071211|50183L107|LDK|3012533|LDK SOLAR CO LTD.|58.81
20071212|50183L107|LDK|2841749|LDK SOLAR CO LTD.|57.13
20071213|50183L107|LDK|2850015|LDK SOLAR CO LTD.|59.07
20071214|50183L107|LDK|2597909|LDK SOLAR CO LTD.|57.25
20071217|50183L107|LDK|2609730|LDK SOLAR CO LTD.|56.84
20071218|50183L107|LDK|1454917|LDK SOLAR CO LTD.|68.18
20071219|50183L107|LDK|792823|LDK SOLAR CO LTD.|70.00
20071220|50183L107|LDK|1255644|LDK SOLAR CO LTD.|66.11
20071221|50183L107|LDK|805380|LDK SOLAR CO LTD.|47.85
20071224|50183L107|LDK|891227|LDK SOLAR CO LTD.|45.13
20071226|50183L107|LDK|442683|LDK SOLAR CO LTD.|48.68
20071227|50183L107|LDK|221744|LDK SOLAR CO LTD.|51.88
20071228|50183L107|LDK|275955|LDK SOLAR CO LTD.|47.52
20071231|50183L107|LDK|83206|LDK SOLAR CO LTD.|48.88

November's number was also 20, implying that Fails occured every single day. Now, just to compare First Solar with LDK, FSLR had 8 days in November and only 4 days in December.

What stikes me even more is that the percentage of fails to the daily traded volume is so extremely high.

If you look at blue chips you find daily fails but percentage wise those fails are minor.

Thanks for the link. your layman's version makes sense and I grasp the system but still wonder why nothing is done about it.

Similar if I think about the volume figures of daily traded shares. Can you remember Dec 20, 2008? 16,384,900 is the data per Yahoo. I know this happens to many many underlying but still. It's just pure nonsense.


D Pickard said...

"why nothing is done about it."

I can't help but think that it's because the people that are soppused to be doing something are paid more to do nothing. I don't know that, of course.

I look at the December bump, but I haven't seen enough of these charts on Threshold companies to know how usual it is. Could it be normal delivery delay into the spike as Demand increases very quickly?

I'm not too concerned about the few hundreds of thousands of Naked Shares that have been Outstanding outside of the spike days. I'm not sure why they are there, they keep it on the Threshold list, but they can't have too much affect on the supply of stock.