Market manipulation- how to identify it?$ATNM has been on quite the roller coaster the last few days, and I’ve been reading up on market manipulation as a result. I am a newby to investing, but work in the field of databases and dashboards, so I recognize screwy data when I see it, but have no idea how to interpret in the context of stocks. I think the main Dr KSS comment thread is tired of the topic, but I hope a few of you will join me.
I found a fascinating article on short attacks:
http://seekingalpha.com/instablog/2918951-g-hudson/1026551-how-the-big-players-manipulate-the-stock-market
NASDAQ just published historical short data for ATNM ending on 5/15
http://www.nasdaq.com/symbol/atnm/short-interest
The really big $1,000,000 shorts started with settlement dates at the end of Feb, and the big price drop was intrasession Feb 5th & 6th. The shorts kept growing by 500,000 shares every 2 weeks after that- On the last date they were up to 2,526,000+. Granted, the price dropped $2.79 during that period which invites shorts, but is this normal behavior for a low volume stock?
Now there is one relatively big call left with expiration date of June 19 and strike of $2.5. It’s not a put, which is what I would expect with short attack, but I have very little visibility into very recent past options- say the last 6 days.
There is a graph on Schwab’s options tab that shows the call/put ratio and on April 22 or so there was a huge spike- like 7.40- where all other dates were flat low values. What does that mean?
The big shifts in price keep happening right on the boundaries between normal sessions and pre/post sessions with a huge transaction that doesn’t show up on 1 day graphs, you have to look at 5 day graphs to catch them.
So what do you think- is the last few days of dropping like a rock on fairly good news a result of manipulation, short attack or otherwise?
What kinds of manipulation have you seen in other stocks?
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With the huge options going on in $ATNM, 2,526,000+ If comparable to May 15, and the risks if the writers on the $2.50 strike get caught with the price too high, wouldn’t the writers have plenty of motivation to spend $60,000 to buy a hit job of bad, clumsy PR for a week to get that price down? There is plenty of disgust toward ATNM management being expressed on discussion boards and Twitter today. Quite a few mentioned expressing that disgust via emails to ATNM management.
I’m just really having trouble with the idea that a science company would have anything to do with oh so tacky (and tiny) Edge Media, LLC on the opposite side of the country. Edge does not have much web presence beyond a very bad 1 page site with few details, and a terrible Facebook page. Lots more social site exposure for the owner than business exposure for the PR firm. Wonder if she dates a hedge fund manager?
There is also ‘Edge Media Interactive,’ out of Fort Lauderdale, which looks small but more legit than the Phoenix company; they offer SEO, web development, ‘click based marketing,’ and so on. Interesting hypothesis about shorting, though apparently ATNM had used some kind of promotion company last year. Completely agree it’s backwards if the company is really doing it. It is as if the company’s scientists are working hard on getting products ready to test but there’s a marketing dept of bros who think the thing to do is take hookers and blow to potential investors!
Please follow up with what you find out about short interest. Herbalife is obviously not the only target of aggressive shorting! (Though they deserve it IMHO.)
I was really hoping you’d join me here. From what I’ve seen mining and micro cap biotech are the 2 favorite playgrounds for this type of action. I think what is getting my hackles up are the odd volume patterns- huge transactions moving the needle at strategic times to have max price impact with least visibility.
Problem with the other Edge is the name doesn’t match the newsletter- and their area of expertise doesn’t match either. They are all about the targeted, embedded web page ads – the annoying ones where you shop for something online and for the next 6 months every site you hit has ads for the product you shopped for? I love your analogy on the hookers and blow- it is exactly right. That is why I think 3rd party- and with millions in options play over the last 4 months it isn’t as unreasonable as some might think to buy enough time to get the options covered.
Red Chip clearly states ATNM paid them for 6 months of promotion, no mention of any middleman PR company. Also, while it is a bit uncool, it is nothing like the completely tacky Edge Media, LLC. I can see the fit there between a science geek buying a “research” PR firm service.
Turns out the report I liked so much at Microcap Research was also a purchased service. Much classier IMO than Red Chip or the newsletter company from yesterday- SmallCapIR.
Disclosure: The publishers of MicrocapResearch.com own shares of Actinium Pharmaceuticals (ATNM) bought in the open market and received compensation of $20,000 from an unrelated third party for our article and facilitation of investor awareness in the company.
That’s a pump and dump disclosure from Microcap Research. Companies have legitimate reasons to hire IR firms like RedChip, even firms that look kind of sleazy, because generating investor interest is a core business activity of public companies that require ongoing capital infusions… it’s not that different from what large firms do with visits to CNBC and presentations at investor conferences and having in-house IR staff who sweet-talk the mutual fund managers who call for info, though for small firms it’s often even more important because if they need to raise money by selling stock every couple years they can’t afford to have the stock price drop too much — but the only reason an unrelated third party hires a stock promoter is so they can drive the stock up to sell it in short order. Doesn’t always work, of course, but from what you’ve said it sounds like ATNM over the past year or so has probably both hired IR/promotional firms and has been targeted for pump-and-dump promotion.
And to reiterate, I know nothing at all about ATNM.
It is done to provide liquidity to sellers, not necessarily drive the price up. They usually own it much lower and/or have lower converts.
True, that could be a squishier kind of “pump and dump” — has there been insider or fund selling?