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Cassava Sciences, Inc. – SEC Trading Halt Saved Shorts At Least $164 Million

Anthony Cataldo profile picture
Anthony Cataldo's Blog
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My TDAmeritrade account shows Cassava Sciences, Inc. shares outstanding at 40 million and short interest at 27.35% of float on November 30, 2021, as follows:

The price-per-share for Cassava Sciences would have probably gone above the pre-market high at $58.69, but the Securities and Exchange Commission [SEC] interfered with a likely “short squeeze.”  In doing so, it was apparent to anyone looking at level 2 that program trading was used to drop the PPS to a trading range where institutions are likely to be “shorting against the box.”  This is a profitable trading strategy, for the institutions, but not so much for the nearly 75% of retail shareholders.  Retail investors do not usually have the very expensive software to maximize returns and do not control order flow and cannot "front run" other trades.

I have prepared a graphic, below.  You decide whether or not the SEC acted in the best interests of the shorts or the long retail investors.  November 4, of course, was the event date for the first academic journal article clearing SAVA of any wrongdoing.  December 21, of course, was the event date for the second academic journal article clearing SAVA of any wrongdoing.  I would have expected the second confirmation of the science to have an even greater impact, but see how the SEC “killed the rally” and unjustly enriched those involved in the “short and distort” scheme (e.g., I maintained the same slope in the narrow arrows, to give readers a bit of an idea of what did and could have occurred).

You will have to give this matter some thought, but if you are long SAVA, you should not be pleased with SEC involvement.  Alternatively, if you are short SAVA, buy an SEC employee lunch or even a worldwide cruise or European vacation.  They helped you makes lots of money.

Stay well.

Analyst's Disclosure: I/we have a beneficial long position in the shares of SAVA either through stock ownership, options, or other derivatives.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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