The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Companies like Motif Bio exist because a form of market failure (new antibiotics being held in reserve) which has led big pharma to under supply new antibiotics for a generation. The health secretary Matt Hancock spoke of the need to support the makers of novel antibiotics yet I wonder how much assistance the government has offered Motif in its current funding difficulties. If you are on twitter it might be worth tweeting him to find out.
I really don't see what the company has done wrong or the FDA. This is a process new drugs have to go through and they require additional information. This happens fairly regularly. The firm can't issue guidance on how the submission is going beyond the timetable. Speculation on this board is simply that and I don't think that when things go wrong people should assume malfeasance. The FDA is there to protect patients not shareholders.
Likely holders of US warrants who hedged their gamma will be back in to buy their hedges (If they have enough time after counting their money) when the US opens.
Just seen price and I have to admit that down 10% over three days before the decision does feel a bit like a hedge might have been having a go at it the last couple of days. That said they could have been the people buying amphion and might just be putting on a hedge on motif. If you short motif and buy amphion you would likely do them in different ratios.
The other thought I had was than amphion could have been told to sell a few motif shares over the last couple of days or decided to (I'm not sure what the disclosure requirements would be).
Lastly it could be People hedging vs warrants. The implied volatility of the warrant will collapse tomorrow so they could be hedging in anticipation.
I did too and I think that most did. Accordingly lots probably holding a few more shares than optimal hoping to chop a few for profit before the announcement for profit.
In isolation I certainly wouldn't. However lots of professional investors that would be in this trade at mid to high twenties could be taking profit on an enormous profit for a six week trade. Also lots of traders stay away from binary outcomes so early in the year hoping to build up a bit of p&l before throwing the bat around a bit. Let's be honest motif is a small stock with medium free float and is hardly the centre of the investment universe. Indeed there will be some trading algorithms in this stock trading purely on momentum without any view on the decision so they would have got long over the past weeks and now be looking to sell. I am really not overly surprised or worried by the price action given where the stock was.
I can't quite fathom why you are getting quite so excited but perhaps some crayons and a colouring book might soothe your mood a little.
Exercise of warrants is never good for share price; not always
1) Depends on the delta of the warrant and how much it has been hedged
2) In a short squeeze the exercise of warrants and call options is precipitated by recalls and increased borrowing costs
3) Cash constraints and or investment plans may have necessitated investment on margin.
4) Most investors take in the money warrants into account when establishing total number off shares in issuance for their valuation calculations.
I don't think the gearing is as high as you think. They are convertible notes which will heavily dilute.
I really don't think people operate like that because it doesn't really work. Quite often on these boards I see people claiming that market makers seek to manipulate the share price. That is really not how it works. Automatic market-making often trade on momentum based indicators and relative value. An algorithmic trading strategy will potentially amplify volatility by trading the momentum of order flow. In my view what you describe is probably just a broker working an order in an illiquid name on a vwap or twap basis.
Petch I am sorry to say I don't think your post makes an awful lot of sense. Many entities are limited to what they can buy based on approval. A fund manager would find it hard to justify investing in a company that until approval is essentially without a product. Many hedge funds turn over their books very quickly based momentum generating events. Until approval is granted it is difficult to know the timeline of a trade and also there is an asymmetric risk when weighed against other investments.Hence there is less of an appetite for such an investment.
If approval is granted and no plan announced then there are plenty of hedge funds who have deep pockets and would have a plan to commercialise the product.
But it is the directors squeezing it for the holding through the convertible promissory notes.
For me the worry with AMP is corporate governance. I looked at the website and I couldn't find any info on the convertible promissory notes beyond dec18. I couldn't understand the rationale for the convertible promissory notes vs selling stock or options as I think this might have given a better return to shareholders.
Having been in Motif for a while and having previously used Paratek as a bit of a yardstick. I had a look and couldn't find a compelling reason not to invest because my position in Motif was large enough that I didn't want to add there. Just interested in others views on Paratek lots of US brokers have it a highly rated buy but it has taken a hell of a beating.
Noticed that Goldman's opened a position in December. Certainly view that as positive.
The thing is best practice might be to always apply giving individual beneficial owners it might be go we're trying to avoid transaction costs or admin time and essentially made a mistake. I think either link or hl made a mistake but if it was link then hl as our agent should be pursuing link on our behalf.
Surely HL are liable even if they were not asked for sub accounts? They have a obligation to act in a professional manner and follow market convention. I don't believe they have done this here.
Also like when hargreaves or brewers show up on a uk holding boa will be holding for private individuals in the us. Lots of rich doctors who are hugely impressed with the drug hopefully.
Boa ml are a big prime broker in the us. So they might have synthetically borrowed the shares for clients who are hedging warrants.
They are hedging the warrants but not exercising early. Hence the build up of borrowed stock. As time passes they will need to sell more stock against their delta. Also you need to borrow stock for the cross border ord / adr trade so I think in this case there Is a decent nontouiresdom for the short interest. Also on IG you would think plenty of people might have the long amp short motif play on.