When working with financial statements, I learned some time ago that issued shares was the number of shares a company had made available to the investment world. I also learned that the float was the number of shares that were actually available to trade, so to speak. We added the number of shares owned by insiders and together with the number of shares owned by institutions, subtracted the sum from the number of shares issued and that was another way to get the approximate float. As a dear old professor of mine, Dr. Allen Meltzer would say when a student came up with an absolutely ridiculous answer, "what a fool I have been."
Well from the looks of this chart we have all been fools, or perhaps better put suckers. For the purposes of this chart, let's assume that the entire number of shares issued equals the float versus the real world analysis given above. There are 39 equities listed below, all of which, at some time or another have been on the SHO List we have all come to know because these stocks are the victims of illegal forces. We could not resist this exercise and took the time to assemble the latest information from www.j3sg.com and www.finance.yahoo.com as it relates to the companys' financials and put together this little demonstration. You see, when a stock is attacked by the forces of naked shorting something very strange often happens. Sometimes the number of shares owned by insiders and institutions equals more than 100% of the total stock issued or as we call it in this chart, the float. Either way, as shown here for these 39 stocks, on average the Total % of the Float Outstanding is 129.49%.
Amazing right, but there is something more amazing; the fact that there has not been a greater incidence of corporate shareholder votes where the number of votes cast is not greater than the total number issued. Could it be that the DTC is actually aware of the number of "real" shares on the books and only those "real" shares are the ones that are voted.
Professor Allen Meltzer could be known to many of you as for years, he was the Chair of the Shadow Open Market Committee from 1973 to 1999, the group that essentially shadowed the Federal Reserve. Great teacher, tremendously logical individual and his use in this example gives rise to what is needed, a watchdog group of people, perhaps called the Shadow DTC/SEC Committee to make sure those in power, who may be a little too intertwined have a solid, fundamental oversight group to kind of "look over their shoulder." Might be worth a shot . . . but then again what do I know, quite often Meltzer was talking about me when I asked a question that did not always make sense . . . but then again, I remember a few remarks that changed the way he thought, like this one.
| Symbol | Price | Capitalization | Avg. Volume | % Float | % Float | Total % Float | % of Total |
| (In Billions) | (In Millions) | Insider Owned | Instit. Owned | Outstanding | Cap Traded | ||
| HANS | $24.82 | 2.29 | 3.332 | 3.38% | 96.84% | 100.22% | 3.61% |
| UCBH | $5.19 | 0.573 | 3.332 | 1.58% | 99.72% | 101.30% | 3.02% |
| MTH | $14.00 | 0.43 | 1.282 | 6.71% | 94.90% | 101.61% | 4.17% |
| MTN | $26.15 | 0.966 | 0.557 | 0.81% | 101.37% | 102.18% | 1.51% |
| CREE | $20.93 | 1.84 | 1.38 | 2.18% | 101.10% | 103.28% | 1.57% |
| GM | $4.89 | 2.77 | 27.855 | 0.14% | 103.84% | 103.98% | 4.92% |
| COLM | $35.72 | 1.24 | 0.373 | 59.96% | 44.76% | 104.72% | 1.07% |
| EMKR | $3.61 | 0.28 | 1.922 | 12.35% | 92.95% | 105.30% | 2.48% |
| PII | $35.11 | 1.14 | 0.645 | 2.08% | 103.53% | 105.61% | 1.99% |
| FTK | $3.76 | 0.087 | 0.414 | 10.18% | 96.44% | 106.62% | 1.79% |
| SPWRA | $43.01 | 3.66 | 2.877 | 51.77% | 56.72% | 108.49% | 3.38% |
| USNA | $41.89 | 0.683 | 0.259 | 67.33% | 41.59% | 108.92% | 1.59% |
| RWT | $15.33 | 0.514 | 0.701 | 0.77% | 110.13% | 110.90% | 2.09% |
| KMX | $10.33 | 2.25 | 3.265 | 1.31% | 109.66% | 110.97% | 1.50% |
| HOV | $5.20 | 0.399 | 3.766 | 18.10% | 93.49% | 111.59% | 4.91% |
| LULU | $19.56 | 1.33 | 1.143 | 0.00% | 112.97% | 112.97% | 1.68% |
| EWBC | $13.59 | 0.863 | 1.864 | 1.98% | 112.13% | 114.11% | 2.94% |
| MEG | $11.50 | 0.263 | 0.267 | 20.79% | 96.66% | 117.45% | 1.17% |
| TLB | $9.00 | 0.498 | 1.289 | 58.04% | 60.23% | 118.27% | 2.33% |
| LZB | $7.41 | 0.381 | 0.373 | 2.99% | 117.08% | 120.07% | 0.73% |
| AMWD | $18.02 | 0.253 | 0.088 | 38.78% | 81.68% | 120.46% | 0.63% |
| CCC | $16.70 | 0.688 | 0.768 | 8.44% | 112.42% | 120.86% | 1.86% |
| SHLD | $70.92 | 8.97 | 3.124 | 11.25% | 112.82% | 124.07% | 2.47% |
| PNRA | $39.24 | 1.2 | 1.093 | 3.73% | 120.84% | 124.57% | 3.57% |
| LFG | $12.40 | 0.192 | 0.628 | 3.29% | 121.75% | 125.04% | 4.06% |
| TRLG | $16.90 | 0.412 | 0.902 | 7.62% | 119.29% | 126.91% | 3.70% |
| PFCB | $24.24 | 0.576 | 0.356 | 0.89% | 131.95% | 132.84% | 1.50% |
| PRAA | $34.19 | 0.525 | 0.173 | 24.47% | 108.90% | 133.37% | 1.13% |
| NFP | $10.76 | 0.427 | 0.637 | 25.47% | 110.96% | 136.43% | 1.61% |
| CALM | $24.32 | 3.98 | 1.089 | 38.61% | 102.39% | 141.00% | 0.67% |
| ITMN | $14.33 | 0.563 | 0.512 | 32.61% | 116.52% | 149.13% | 1.30% |
| LTM | $17.90 | 0.709 | 1.088 | 14.16% | 135.44% | 149.60% | 2.75% |
| VPRT | $26.00 | 1.15 | 0.935 | 4.53% | 154.79% | 159.32% | 2.11% |
| NTRI | $15.09 | 0.446 | 1.006 | 41.63% | 120.11% | 161.74% | 3.40% |
| NILE | $41.96 | 0.611 | 0.35 | 14.49% | 151.28% | 165.77% | 2.40% |
| ZLC | $20.00 | 0.638 | 1.059 | 1.88% | 168.88% | 170.76% | 3.32% |
| JOSB | $27.66 | 0.503 | 1.693 | 2.95% | 185.60% | 188.55% | 9.31% |
| ARTC | $24.18 | 0.644 | 1.186 | 1.30% | 199.36% | 200.66% | 4.45% |
| AGO | $10.25 | 0.932 | 2.775 | 113.99% | 136.48% | 250.47% | 3.05% |
| Average | 1.176 | 1.958 | 18.27% | 111.22% | 129.49% | 2.61% |
Shouldn't the firms listed be entitled to the proceeds from the sale of their equity? This issue appears to be overlooked as the concern about shareholders overshadows the underlying rights of public companies. The point of being a public company is the ability to sell equity in return for capital. When the naked short sellers dump non-existant shares into the open market, they:
1. Deny the public company the proceeds from the sale of their equity to legitimate buyers.
2. Trash the stock price by creating a supply/demand imbalance.
3. Damage the image, reputation and credit rating of the underlying firm.
Why aren't more public companies crying foul?
Chekk
Posted by: Spellchekk | October 13, 2008 at 09:33 AM
Got a letter in the mail today re a Clas Action and it made me wonder: Is naked short selling by hedge's, or whomever, not a potential class action lawsuit in the making? I am probably legally niave about this but it just seems that if management can have a suit brought against them, why not naked short sellers? Wouldn't a good legal tema get more done in a year than the chairman of the SEC will in a lifetime? Just seems to me like the naked shorters have exposure to liability issues although I have never heard of anything like that.
Rayn
Posted by: Rayn | October 14, 2008 at 07:59 PM
Rayn,
In a couple days we'll reveal our approach to the problem. You are not far off in your idea.
Thanks for taking the time to comment.
AMG
Posted by: dzimmer@aaronmorgangroup.com | October 15, 2008 at 12:02 AM