Justin M. Hall's  Instablog

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  • User 93961: 
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  Are you also in favor of a down tick rule for buying stocks? If you feel hitting down bids artificially moves prices lower then buying on upticks must move prices artificially high, right? Short sellers are not destroying anything. They can manipulate stock prices in the short term, but have no negative long term effect. If ZEVALIN sales continue to improve, FUSILEV issues get settled, and EOquin stays on course SPPI will move back up and higher from here then the shorts will lose lots of money. The only way to have any semblance of fair market price for a stock is to allow free buying and selling of shares. Today SPPI is weak due to the higher margin FUSILEV sales being horrendous as well as short term players getting out after just making a quick 20% or so. If there weren't these shorties you and I and everyone else who have to pay a higher pps to acquire a stake in SPPI. I greatly appreciate your overall knowledge and posts, and share your bullish thesis on SPPI, but I can't agree with you that short sellers are some sort of evil that hurts shareholders.

  Nov 12 01:39 PM | Link | Reply
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  • Justin M. Hall: 
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  Regarding short selling, I respectfully disagree and point to most, if not all, daily charts of US corporate common shares since the up-tick rule was abolished.
  
  The price action of US equity via common stock has dramatically changed and oddly represents the same sort of action during the crash of 1929 and before Joe Kennedy implemented the up-tick rule.
  
  While I do value short-selling to maintain balance in the market, abolishing the very rule that was implemented following the '29 crash in order to temper volatility and the effects of piling on short sales makes little to no sense especially after the recent collapse.
  
  So, I do NOT advocate the elimination of short selling entirely. However, I firmly believe that short sales should be regulated as prescribed under the former up-tick rule in place prior to July 2007.
  
  It should be noted that I am a fiscal conservative and do not favor excessive regulation of the markets or business in general. Because I am pro-business, I favor protecting US corporate common stock as well as the net-worth of American investors.
  
  Justin

  Nov 12 02:15 PM | Link | Reply
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  • User 93961: 
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  I think short shares should have to be reported in the same manner as long holdings are reported (I realize this is not a novel idea by any means). If funds had to show they were shorting specific stocks, there would be much less naked shorting as it would be more clear as to who is engaging in such activity. Fair or unfair there is a negative perception of shorting stocks and this would lead people/funds to be more careful how, when and what they are shorting.

  Nov 12 02:28 PM | Link | Reply
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  • Justin M. Hall: 
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  Common ground!
  
  I am also open to that proposal.

  Nov 12 03:03 PM | Link | Reply
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  • Josh Rachlis: 
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  Justin, what do you think of SPPI's inclusion in the NASDAQ Biotech Index? It just happened after closing today.

  Nov 14 01:51 AM | Link | Reply
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  • Justin M. Hall: 
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  Josh:
  
  I wasn't aware of it. So, thank you for the heads up!
  
  Will it help?
  
  As I recall, some specialty funds (exchange-traded and mutual) invest in the companies that are inside this index. So, I don't think it'll hurt. It will be interesting to see what effect, if any, this might have on Monday's trading. :-)
  
  Add another (+) to a long list of good things that (SPPI) has accomplished in 2009!
  
  From my view, the writing is on the wall especially after the Q3 announcement. Sooner than later, SPPI should begin to move much higher from here. The very important Annual ASH Meeting (much like ASCO) is just around the bend December 5 to 8.
  
  So, stay tuned as work is in progress.
  
  Justin

  Nov 14 01:53 PM | Link | Reply
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  • fishluvrain: 
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  Justin Hall, I agree with the desire to have the uptick rule brought back. I also agree with the idea for funds (and insiders) to disclose short positions. A previous commenter suggests that perhaps longs purchasing shares should then be limited to purchase on a downtick, absurd... Someone purchasing long is putting the money for gain or loss until shares are sold. Unless you are buying on margin you must have cash in your account to cover the expense of the purchase. Not true of selling short. A short seller is not financially at risk until the short position is covered. A short seller is supposed to have shares in the account they hold short positions in, or have them borrowed for that purpose. Unfortunately that also is not always done. (Naked Shorting). Were the brokers transacting the short trades to demand verification of shares held at time of a short sale, I believe that would help. It is more likely that someone with enough funds opening a short position on a downtick (or also uptick) to create downward pressure and hold, creating a depressed share price, then, were they to go long and and hold creating a situation where the share price advanced due to that investment. If the short was immediately responsible for the cost of shares it would be different. Perhaps to not be able to borrow shares at all would be better. I can't borrow short sellers stock positions to go long...I also believe that a short position should not be able to be closed until the long shares are surrendered.

  Nov 17 12:13 AM | Link | Reply