Brent Atwood

Long/short equity
Brent Atwood
Long/short equity
Contributor since: 2013
Company: N/A
Just catching this release, been at the barn with the phone on mute. This is going to get really interesting to say the least.....
I don't really pay attention to analysts, they are kind of like food critics. They can't afford to open their own restaurants so they write articles meant to influence decisions of the general public, and most of the time, with a bitter taste in their mouths for being at the bottom of the food chain. I have more respect for food critics, because they actually write their columns after they have dined with the establishment, not before.
As far as how low the stock can go..... I wrote a financial paper titled P.O.W.D.E.R. - Point of Widespread Diminished Earnings and Returns. It is a financial model designed for shorts and longs alike. Regardless of the asset class the stock will reach a point to where it is no longer profitable to be short/long and the risk aversion trade will kick in. So, at what point does it become financially stupid - for lack of a better term to remain short/long? That is not really a point we can choose, but Chaos Theory in Finance gives you an equation to help you figure it out. It is usually when sentiment becomes so negative that a buy in cannot be contained.
That point is usually reached when, in the case of Hercules, the Accumulation/Distribution reverses trend and continues to trend upwards against a falling stock price, regardless of buy/sell ratios. Hercules reversed the negative trend Thursday, February 6th at 9:46AM and has continued to trend upwards through close of market today. A pivot point was reached on Accumulation before a pivot occurred on the actual price per share, so we got a little pop into the close, and the volume was OK but not monumental. There is also a trend line in play that the equity keeps hitting on the upside, which is proving to be beneficial for short sellers right now, however if you pull a 5 year chart the overall trend is still up and draw a trend line from the low in 2009 to the low today, the equity found support at that trend line.
There is also a dinosaur trade happening. This is usually a cyclical slow time for drillers in general, so shorts and analyst jumped on a short wagon and went a little nuts. The only problem is Hercules bucked that trend this go around, and has confused the cycle and actually posted some monster numbers of profitability, and now the analyst are wrong and the short position is wrong (even though shorts are making money right now). So now they are trying to make themselves right by continuing to be wrong.
The real fun happens when new short sellers come in and existing shorts cover by buying fresh short sales and the stock starts to move up and people start scratching their heads trying to figure out how the short position is getting bigger, while the stock continues to climb on the risk aversion trade. That's when I get excited and this usually rarely occurs unless an equity has a low float and keeps getting dinged with regSHO violations. (I trust you understand that paragraph). (Chaos Theory kicks in).
So, look, I spent more time here than I thought I would, especially with the weekend here, but don't sweat it. The GoM is not going anywhere. Hercules is the dominant player, with higher day rates, higher utilization rates, they are dipping into Deep Water and International and they keep beating EPS and Revenue estimates.
I could care less about the age of the fleet. My Dad's ping putter still works great and anyone that has ever roughnecked or been a tool pusher knows exactly what I mean. You really need to grow up around oil to understand it. And as far as the food critics are concerned, I doubt any of them have ever walked through the front door of Hercules's Corporate HQ or ever been on a rig.
The second biggest threats to the short position now, they have made the company a very attractive take over target.
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@TXCID - RegSho report out. Over 10 million shares shorted in the last 9 sessions. 1.9 Million today!
Since January 1st nearly 20 million shorted into an amazing earnings report and 3 RegSHO intra-day violations in the last 12 sessions. HFT and UHFT have turned over the entire shares outstanding once and the trade float 13 times since 1/1/14.
That's just nuts! (or should I say manipulation?)
Let's put it this way. The great thing about being retail vs. institutional is I am not required to disclose my position until it breaches 5% on form 13G.
I am a chaos player and a former investment banker so I am well versed on how the game is played, and I have busted naked short positions over and over on small cap companies. My audited returns are publicly published and none of the analysts offering their research opinions can even come close to my returns.
If I acquire enough shares to have to file a 13G/D on Hercules it will not be as a passive investor.
Wow, on RegSHO again and 18 hours before earnings.
There will be no open forum on the discussions or TCR submission including supporting evidence and documentation.
@Bsav - long time no chat. Heading up to D.C. tomorrow to see a few friends at the OIG and then a weekend with a few lobbyists. Will be at 100F Street on Monday and Tuesday per their request.
Happy Trading.
I am glad that everyone found the article interesting and informative. As of this morning, it appears as though I am taking a trip to Washington D.C, courtesy of a very large law firm and at the request of a regulatory agency.
Should be interesting to say the least.
Happy Trading.
Any other questions as we clear the 4.53 hurdle today?
Wow, glad I didn't publish such an article only to see a filing two weeks later that George Soros Funds established a position.
I think you mean with the author? The point the "author" should have really focused on is DRYS is NOT a shareholder friendly company and neither George or any of his "so called" managers ever have been.
Heck, he even made fun of the US exchanges and investors a few years ago, the video is on YouTube TM somewhere. I think it was on his first shipping company that went bankrupt a few decades ago. I have been in the markets a very long time, so I am not looking this up, if you want to research it feel free.
So, to side with the "author" management's overall view of shareholders and dilution is a non-event for them, however they are going to fall over backwards into an upswing in the BDI and Drilling arena which in the long run should make the current at the market equity dilution a non-event. That being typed, there is limited upside for the total market-cap of DRYS and though I am long shares well below the current market price I would be surprised to see two (2) billion in market cap anytime soon, until debt and dilution issues are better under control. You can't ignore the book value at $6.98 - or the forecast of 189.7 % EPS growth for 2014. Just on fundamentals they are clearing the choppy seas, on technical, they are finishing a Fibonacci ARC trace and could potentially clear 4.00 if they break the pivot at $3.48. Personally, I am keeping my eye on that A/D Chart on the 100/5 day averages. That is a significant upswing in institutional buying.
If I start to go into Ocean Rig, I might as well scribe and article.
Good Luck and Happy Trading.
As I look down, shaking my head laughing, there is only one point that is even credible in this article.
It is quite a shame that any opinion can be construed as journalism with any merit these days. And as far as Yahoo! finance data is concerned, it is delayed and outdated at best.
The article also failed to mention that institutional accumulation has increased by 6 million shares in the last 5 trading sessions alone.
"Dry" this article out and fertilize the lawn.....
Well, something got revealed and it was a Securities Fraud Investigation against Biosante's officers and BOD. You really think any biopharma has any interest in a company whos litigation bill is about to wipe out the rest of shareholder value?
Good Luck with that play!
BPAX a buyout target? What is this a Yahoo! Message Board?
The RegSho daily report says it all. Every time there is great news twice the actual volume trades on HFT or Flash in an effort to manipulate the stock down.
It is no secret there is an open SEC investigation against two firms that are short in the millions of shares against their clients.
They are the same two firms that recently begged Chicago to get options trading so they can attempt to hedge, but no one is biting on the options.
The short and distort campaign is over. 11 million short with another 3 million short in dark pools and about another 1.5 million on exempt waivers at NASDAQ.
Is only a matter of time now.
You should check your facts before publishing. BioSante tried to play the blame game on Antares for their drugs data vs a placebo. 3 days earlier AIS received an FDA approval for the same delivery gel for over active bladder treatment. AIS was caught in BioSante trying to divert the blame for their drug crapping out. It was the drug that failed not Antares's delivery gel, and BioSante licenses from AIS. AIS is not developing BioSante's failed drug. Nice attempt to dissiminate false and misleading information!