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  • EBIX Stock manipulation 1 comment
    Mar 29, 2011 1:05 PM | about stocks: EBIX
    It is obvious that stock manipulation was involved in the recent price decline of EBIX stock. The 'Copperfield Research' article first appeared on 22 March as an instablog and had no effect on the stock price. It later appeared as an article on the 24th and the stock declined 25%.

    Clearly the second time the article appeared traders were ready, and sold off heavily to trip stop losses and create general panic. The stock was moderately overpriced at $30, but by no more than 10%. Now it is under valued. There may have been no direct connection or communications between Copperfield and the stock manipulators.

    I have no objections to the article. It was a partially useful exercise to go through his arguments to recheck my investment thesis. However, there is no new information in the article. It is merely a rehashing of known facts, with some misleading or just plain wrong statements.

    Although I have taken advantage of the recent bargain offer, I do believe it is not in the best interests of the company and its shareholders in the long term to be subject to stock manipulation.

    EBIX management have left themselves open to it by poor communications and poor handling of the public aspects of a publicly quoted company. It is not effective to 'let the numbers speak for themselves', at least not in the short-term.

    EBIX management need to take a series of actions to keep the stock price rationally related to intrinsic value. They can find out what to do in the shareholder letters of Berkshire Hathaway.

    As a first step I suggest they stop options trading in EBIX shares. The way to achieve that is to effect a 10:1 reverse stock split, so that the stock trades at around $220, and a single options contract would be $22,000. I believe the large short interest would disappear and volatility would be much reduced.

    The company should take effective action to minimise stock manipulation and improve shareholder communications. It is in their own interests to do so.
    Themes: stock manipulation Stocks: EBIX
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  • Good article.
    29 Mar 2011, 08:06 PM Reply Like
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