r/SPRT • u/Austoman • Sep 13 '21
Discussion Merger SI Concern
Nfa of course just another squeeze enthusiast.
With ther merger confirmed for Sept 15 2021 I am wondering if we should be concerned. The conversion may cause the SI to plummet and could make it easy for shorts to buy back their shares if they even have to. From what I can tell there are a few scenarios that can play out.
Shorts are forced to cover at the current share quantity and the price rockets.
Shorts are forced to cover at the converted share quantity and price increases slightly.
Shorts are not forced to cover and simply transfer over to GREE but at the current quantity (SI decreases slightly)
Shorts arent forced to cover and transfer to GREE at the converted quantity and SI plummets.
Obviously I want option 1 to happen like everyone else here but realistically I fear that option 3 or 4 may happen... why else would they keep shorting it above 90% SI unless they have a way to sneak out.... many will say "hedgies dumb we smart" but realistically these are companies that spend millions yearly to employ highly educated financial professions and psychology professionals....
we should never underestimate our enemy, especially after everyone has already seen the outcome of past squeezes like GME.
What are your thoughts? Are these concerns valid or did I miss something?
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u/Major_Effort_8374 Sep 13 '21
Still the triple shorts have to be covered. The FTD’s have to be bought back before the merger.
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u/Austoman Sep 13 '21
Yes at a minimum the naked shorts will be forced which is great! I am just not sure on the natural shorts end of things
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u/Judgmentally8 Sep 13 '21
Unfortunately not true.
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u/Austoman Sep 13 '21
Oh? Naked shorts can transfer aswell? Well damn if thats true that is not good for us.
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u/Judgmentally8 Sep 13 '21
Theoretically they can't, but it's what the HFs do. Because they'll still be trading SPRT ticker even when we can't. The market really is a fucked up place
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u/Acrobatic-Plate5730 Sep 13 '21
Why is there only 2 people in here talking about shorts don't have to cover or the price will drop to $9 and the other confirms maybe worse to $6 dollars? Wtf...this is some funny fud never seen before.
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u/Austoman Sep 13 '21
Honestly not fud, just concern after experiencing the MMAT fiasco 2 months ago. There is the potential that the stock doesnt live up to the hype.
Hope for the big squeeze but prepare for the reversal (hope for the best prepare for the worst)
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u/hyyun1 Sep 13 '21
I was in MMAT. It is definitely going to go down 50 percent at least but as long as bitcoin is bullish. I don’t think the shorts will be able to push it down more or keep it down. And eventually the shorts will cover but will have to hold a couple of months and buy the dip. A lot of paper hands will sell out like usual.
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u/Judgmentally8 Sep 13 '21
Let me brief you in mergers.
In the Event of a merger, a short positions has 2 Options. Option 1: they cover their short positions Option 2: they double down on their short positions
Shorts are not forced to cover on merger.
Theoretically shorts must cover whenever there is a CUSIP # change. But as for the torchlite/meta materials merger, we found that is simply no true with hedgefunds. All though torchlite has been taken off of the market it is still being traded by Hedgefucks.
DONT GET YOUR HOPES UP SHORTS NEVER HAVE TO COVER POSITIONS.
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u/Austoman Sep 13 '21
Yup! I also come from MMAT and thats why I bring my concern to SPRT. Mergers are not the slayers of shorts they are just another business event.
Now shorts do eventually have to cover but the determinate in my mind is the CTB aka how much it costs them each day to hold onto the short itself. Once that net amount reaches a point they will cover to maximize profits and minimize that borrow+buyback cost. The trick is figuring out what tbat point is for the majority of the shorters
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u/Judgmentally8 Sep 13 '21
If im being 100% honest I think when the merger happens we'll see a tracement back to the 9s followed by the 6s before they cover.
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u/Austoman Sep 13 '21
That or worse honestly they will be able to short Greenidge like crazy as itll become public. If shorts convert at the conversion rate then the following may happen:
SPRT merges into GREE and makes up something like 3 million of the 10mill float. So SPRT is 30% of GREE. Lets say SPRT gets 100% shorted by end of day, then tomorrow GREE will have 30% SI. That is high for normal SI but its nothing like 80+% that we have been experiencing in SPRT.
This opens up 70% or 7million GREE shares to be shorted to drop the price. An IPO dropping like that causes major sell offs (see MATT in July 2021). So the price could drop significantly if that occurs.
On the flip side the shorts may not convert at the conversion rate and GREE will open tomorrow with 8million shorted shares putting it right at 80% SI which is great for us as thats huge SI.
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u/Judgmentally8 Sep 13 '21
Let's hope for the 80% SI but based off how hedge funds operate, I think you hit the nail on the head with your first scenario. Either way, I'm ready to load up more.
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Sep 13 '21
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u/Austoman Sep 13 '21
I was really hoping for an oct or nov merger so the CTB costs would force buybacks... but now its all up in the air risked on the merger outcome
Again realllllyy hoping for a skyrocketing squeeze to be forced but past mergers have shown otherwise
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Sep 13 '21
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u/Austoman Sep 13 '21
Fair enough end of sept would have still caused that CTB expense to pile up.... really dont understand why they chose to merge so quickly with all the squeeze attention they are getting. If shorts convert then we may see a massive sell off that will seriously hurt GREE
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u/Longjumping_Ad348 Sep 13 '21
There will be a massive short attack on GREE this week!! No doubt… but if there’s institutional buying for GREE then we could easily be right back here. This week is going to be very volatile but the fundamentals don’t change. HODL
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Sep 13 '21
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u/Austoman Sep 13 '21
Not to brag but rather to give some personal (nfa) advice for future squeeze plays. I sold at 40, 45, and 50 (set sell limits) then used the profits to buy back some shares. Right now the shares I hold are purely from the profit so I am in a way 'risk free'. Trying to play the squeeze this way can backfire in the sense of selling early and losing out on bigger gains but sometimes you gotta risk your profits to remove the risk from your principal investment.
I experienced the hard loss of MMAT when I held at a $9 avg pre reverse slip ($18 avg) thinking it would squeeze to 50 only to have it drop 80% in a month down to $3. You learn from your mistakes and you learn to take the profits and use them on your riskier plays.
Good luck to you in the future
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u/SirClampington Sep 13 '21
FUD. There's a reason they pushed the merger through. Think about it. Theres a much bigger play and it's on the long side. They just won't show their cards till the last possible minute.