Float Lock-Downs -- Speculative Buy & Hold Concept

[kuwlness]

The Float Lock-Down


I'm going to introduce a new concept as a speculative investment opportunity. Another i-hub member introduced me to this particular strategy, and I actually met this person (his alias is Monk and he's becoming very popular on i-hub) in Phx this past weekend. After years of studying human behavior and body language, I think he's legit and I'm going to give him the benefit of the doubt. Not to mention he has a PhD in structural engineering, so you know he's good at math.

So his concept/strategy is as follows:


Buy, and Hold. It's really that easy.

Well, that is the easy part. The difficult part is understanding why this will work. Monk finds stocks with a specific share structure, usually targetting companies that have a large amount of insider ownership, and a moderate O/S (oustanding shares).

He then begins buying in large sums and announces it to his board. He currently has three different lock-down stocks right now -- CDIV, EIGH, and GRNO ... I've invested quite large in these stocks over the last few weeks because I believe in the strategy and am not sure how much longer these opportunities will be presented (never know when they're going to regulate the market more).

Monk has been running CDIV since June of last year. He has brought the price of the stock up from .0007 to where it is today, .40 and he's still buying!! Clearly one would think "why would I invest in a stock that has already done this," and "where is the upside potential?"


Well, the whole concept works because no one sells, except the flippers and day-traders that are bound to show up. The MMs short pinksheets aggressively because they can get away with it, in most cases enough to cause selling so they can cover their short positions. Now what Monk is trying to create (and eventually will create) is a Short Squeeze.

Currently, Monk's team can account for 20M more shares than there are outstanding. Meaning the MMs are at least 20M shares short. At some point, the MMs will have to cover these short positions, and when they do, the volume will explode because there are no shares available for sale. The short squeeze should take the stock 300-500% higher from where the short squeeze starts, maybe more.


This is speculative, but I think the concept works and I'm participating in all of them. I think it's worth a shot, especially with EIGH and GRNO since they recently pulled back ... CDIV will likely have the squeeze occur over the next few months.

Just post on this thread with questions and/or visit Monk's board on i-hub and click on the i-box to get more information:

http://investorshub.advfn.com/boards/board.aspx?board_id=2052

 

[kuwlness]

I wouldnt ignore these guys ... these seem like easy money waiting to be made and considering they've all pulled back substantially from their highs, i think now is the time to load up on the cheap.

JMO, but these have huge potential.

 

[PeterGriffin]

Interesting concept, and one I've always wondered about. However, I guess my concern would be buying into one of those stocks, only to have his team dump all their shares without me knowing it. I'm assuming with that many shares being dumped you would lose your ass, no? Is there some Web site where they tell people, in advance, if they are going to exit a position?

 

[kuwlness]

Interesting concept, and one I've always wondered about. However, I guess my concern would be buying into one of those stocks, only to have his team dump all their shares without me knowing it. I'm assuming with that many shares being dumped you would lose your ass, no? Is there some Web site where they tell people, in advance, if they are going to exit a position?

Well, the concept is to sell into the short squeeze ... when the squeeze occurs, it'll be easy to sell.

Currently, they have 30M more shares of CDIV than are outstanding, so that means the MMs are short over 30M already. When you see a 2-3 day volume spike of 3-5x the average volume, you start selling.

This would likely drive the price up 300-500% ... as with every investment, there is always risk involved. However, i see it as a win/win situation if you can throw a few $K in a stock and forget about it for the most part.


I would recommend EIGH as the one people should start throwing money at first since this is very early in the process and will likely appreciate over 500% from these levels before the squeeze even happens. These arent you're P&Ds, this is a float lock-down.

 

[PeterGriffin]

Well, the concept is to sell into the short squeeze ... when the squeeze occurs, it'll be easy to sell.

Currently, they have 30M more shares of CDIV than are outstanding, so that means the MMs are short over 30M already. When you see a 2-3 day volume spike of 3-5x the average volume, you start selling.

This would likely drive the price up 300-500% ... as with every investment, there is always risk involved. However, i see it as a win/win situation if you can throw a few $K in a stock and forget about it for the most part.


I would recommend EIGH as the one people should start throwing money at first since this is very early in the process and will likely appreciate over 500% from these levels before the squeeze even happens. These arent you're P&Ds, this is a float lock-down.

Gotcha. I somehow completely missed the part about the short squeeze in your original post. Thanks for the info.

 

[kuwlness]

Here's my thoughts on the CDIV Short Squeeze, which is the closest of the three FLDs (float lock-downs) to being squeezed:


It's possible that the MMs may have curtailed selling of airshares on Friday, but their threshold for what they can hold in an open short position has still not been reached. They can take it much deeper than most realize. It's opportunity cost that is the driver behind their decision making. They will come out of this stock with a profit, no question about that, it's just the manner in which they will do that.

MM's can take their short position equal to the float even a little more. Typically 80-85% based on my conversation with Monk. That means 50M shares short they can take it to. They aren't probably more than 35M max right now, considering monk's estimates put us at 25M to 30M two weeks ago. Does that mean they will take it to that max level, no not all, different variables come into play into their decision making process what the appropriate threshold is.

Also, FINRA data is misleading. Daily Short Volume does not dictate at all that their short position has increased. Short volume is the summation of open and covered shorts for the day! Therefore, short volume of 1M could be 500K open short and 500K cover shorts, for an addition of 0 shares to the short count. Therefore, all we can assume is that the shares we lock away each day have to add to the short position.

It's about opportunity cost; they will short to a point where it makes sense to and it is still probable that the price will drop. Once that changes, (i.e. a surge in volume that's not worth fighting or a lot of accumulation over a long period of time) the opportunity cost doesn't justify shorting anymore at that pps level. Yes I agree all charts are painted the way they want the picture to look to maximize the probability that they can make profits and also facilitate a market. Some charts they take a more active involvement in like CDIV

Short squeezes happen all the time in the market, they just aren't controlled in this manner. Surge in volume and a stock flying upwards is allowed by MM's because making a profit is easier from the high point then to keep the price surpressed. That's a natural market for the most part with buyer and sellers and MMs just have to let it run and fill in the holes as needed, and make the profit from up top, which again facilitates a market on the way down. In a natural short squeeze, there is an accumulation of shares over a period of time with heavy shorting keeping the PPS down, as many of us have witnessed in stocks, and then news hits that forces MM's to cover and go high with the PPS vs fighting the surge.

There decision again is based on probability that the majority of time shorting a stock and keeping it artificially suppressed leads to quicker/easier profits and the few times the company does come through or news hits, they can cover on those ones and short from a much higher pps.

We are in a unique situation where we are forcing them to choose the only route left for them to make a profit in the squeeze situation!

We are forcing them to make the decision to create an artificial surge in volume which will attract chart players and other traders/investors, which is the covering. Then they short from a position that is much higher and more probably to make profits from. They have to sustain temporary losses but short-lived for them when they decide. The added pressure of having a large naked short position and uplisting decreases their threshold for which they are will to take their short position too.

Or maybe they will just allow for the next leg up to occur in the pps and short from the next point to increase the likelihoo of big sellers, depending on how close they are to their threshold.

Also, they are only going to tie so much money into one stock for a given period time. They have tied a large amount of money up for one stock to have no realized profits. Losses don't come into the picture for them. They will decide that covering at the ask to simulate an artificial surge in volume and lure sellers is the only choice left for them to make a profit and they can do this within a few weeks vs waiting for sellers which could take a longer period of time on what they are seeing on L2/L3 and the length of time it has been where they haven't seen major sellers (again this based on calculated probability and opportunity cost)

The fact that they can see that there aren't any significant sellers at prices anywhere near the pps, that's the only probable choice left for them because they aren't going to sustain a loss.

As some were saying about the quarterly reporting financials. IT's that they need to have enough time left in the quarter to realize a temporary loss during the covering and also realize profits. No way they would start a cover and realize losses right before the end of the Q but it's not because they worried about realizing losses but having adequate time availabe to realize profits because there is no point in letting realized losses hit the books when it just a quick decision and a little more $$ to come out with a profit.

I believe we have 6 weeks or so until the cover but that's definitely not the worst case scenario. I ran my estimate by Monk and we can see a covering anytime between April and August, most likely May. However, there are certain factors i can't get into that come into consideration which can lengthen or expedite this time-frame.

 

[dtran2714]

Go CDIV....WEEEEEE!

 

[kuwlness]

Go CDIV....WEEEEEE!

LMAO, I was just assuming everyone decided to pass on these ...

You can lead a horse to water, but you can't make him drink.


Glad someone saw the potential in these. And to think, today was only a technical break-out, when the squeeze happens, it's at least another 300-500% from where the squeeze takes place.

Then I really wanna hear some Weeeeeeees @)

 

[cashgrinder]

if u talk to monk have him and the crew work on DNNC next. sounds like a very solid strategy....

 

[BigDon]

if u talk to monk have him and the crew work on DNNC next. sounds like a very solid strategy....

great idea cash ! best i have heard in a while... i got a boat load of DNNC
:toast:

 

[ChasinAction]

figured i missed the boat on CDIV, but got on GRNO and EIGH

 

[ChasinAction]

thanks for the tip kuwl

 

[erwinmark]

Investors Hub Operator Pleads Guilty to Fraud 3-Mar-10 05:23 pm - 2/19/2010 7:49:47 AM

Matthew Brown, founder of the Investors Hub website, pleaded guilty this week to securities fraud for his role in pump-and-dump schemes involving four different penny stocks, StockWatch has reported. Together with six other defendants, StockWatch said, Brown allegedly manipulated the stocks through “prearranged trades that were timed to coincide with misleading news and posts on Investors Hub” and then dumped the inflated shares. According to U.S. authorities, StockWatch said, the group pocketed more than $6 million in illicit profits as a result of the complex scheme. One of Brown’s codefendants, Gerard D’Amaro, is expected to plead guilty to similar charges next month, StockWatch said. Four others – Joseph Mangiapane, Pawel Dynkowski, Marc Riviello and Jacob Canceli – have pleaded not guilty, StockWatch said, while a fifth – Pawel Dynkowski – has yet to enter a plea in the case at all. Brown could have faced up to 50 years in prison for his own role in the scam, StockWatch noted, but he expects to receive a lighter sentence in exchange for his guilty plea.


http://thestreetsweeper.org/article.html...

 

[kuwlness]

Investors Hub Operator Pleads Guilty to Fraud 3-Mar-10 05:23 pm - 2/19/2010 7:49:47 AM

Lol, yeah those dudes got busted big time ... pumpin' their pre-loaded penny stocks like no tomorrow with false information. Terrible sham ... and to think they were doing it on their own site. How stupid can one be!?

 

[kuwlness]

if u talk to monk have him and the crew work on DNNC next. sounds like a very solid strategy....

He targets certain Share Structured stocks, but I already mentioned DNNC to him.

He actually really liked ABWTQ, but didnt like the risk of doing the FLD with a Q stock. I'll let you know if I can sway him towards DNNC as I'm still loaded there as well.

 

[kuwlness]

figured i missed the boat on CDIV, but got on GRNO and EIGH

The end-game in all these is the short-squeeze that they're trying to force. So, until the squeeze happens, there's still 300-500% (maybe more) up-side in all these.

But I agree, the others are cheaper and it's easier to buy 'em in quantity

 

[tanner12oz]

im in EIGH with 100k shares.....could easily run back to the 52w high at .13

 

[kuwlness]

im in EIGH with 100k shares.....could easily run back to the 52w high at .13

It'll probably test .13 over the next week. It's ready to break-out technically.

The CDIV effect is carrying over into the other FLDs as you might have noticed. They've all seen a volume spike, which means the squeezes will come that much sooner.

Start of a new Q tomorrow ... hopefully they dont need to consolidate and keep heading north before taking a breather. From a technical perspective, these are all just getting started -- except CDIV, she might need a breather after tomorrow.

 

[tanner12oz]

im up 20% in 3 trading days in eigh

 

[cashgrinder]

two of my brokerages dont let you buy eigh because the company requires you hold certificates for them. How does this create a liquid market for these. not easily bought and sold.

I have a bunch of cdiv