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Shorting the **** out of a stock, but need brief advice on a term.

Discussion in 'Business & Tax Advice' started by fezlopez, Aug 26, 2012.

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  1. fezlopez

    fezlopez Registered Member

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    Hey guys,

    I plan on heavily shorting a stock that is just going down the drain. I did some research on it. Public findings showed the company plans on offering "stock option exchange program".

    All I know is so far is it means the stock will be "repriced", but I don't quite understand the technicality and direct purpose. I've looked online for answers, and couldn't find a clear-cut explanation of what it is and how it works.

    Can someone shed some light on this?
     
  2. The-Truth

    The-Truth Regular Member

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    What information have you looked at to make your decision?

    When a stock is "repriced" that means that the company will either raise the price of the stock or drop it.


    However, that does not mean that the stock will be worth more or less (this is extremely important for you to understand if you don't already)


    for example if the stock goes from $80 to$ 40, that does not mean it lost 100% of it's value... rather it means you got twice the amount of stock at $40 dollars instead of half the amount of stock at $80


    Companies will usually do this for strategic reasons:

    - sometimes it's because they want to target a certain market investor (i.e. people who only invest in stocks that are priced high)

    - they may want more people buying the stock so they will lower the price but provide more shares (this way people with less income can now invest in the company, whereas it was too expensive before)


    Hope that helps,


    feel free to ask more questions, as I do not wish for anyone to get ripped of by the market due to "a hot tip" or "good research" .... trust me I have seen people loose tons of money.






     
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  3. dankerman666

    dankerman666 Regular Member

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    Occupation:
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    Right Behind You :)
    Also referred to as a reverse split to make more shares available at a lower price per share. Due diligence is hard sometimes but always worth it. It would help to know the ticker symbol and which type of stock its listed as.
     
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  4. The-Truth

    The-Truth Regular Member

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    lol, yup, but someone who has no finance knowledge would ask "what's a reverse split", so I tried to make it really clear.


    OH and he probably can't share the ticker symbol because it's such a secret and he can't have anyone else profiting from it ..... I heard this so many times and most of the time the person looses money lol


    let's see what OP gives us to work with here :)
     
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  5. fezlopez

    fezlopez Registered Member

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    Guys, I'm sorry but I can't share the ticker symbol. It's such a secret and I can't have anyone else profitting from it. JK LOL.

    I deliberately didn't want to name the stock to be a bit respectful to the company, that's all. The ticker symbol is EDMC, more than half their business is in student loans. If you are in the US, you know what that means soon (hint: "pop"). It makes sense for them to reprice. They need liquidity.

    Thank you for the information guys. One more question, I've looked at their balance sheet. What is a cash restrictive assets? I believe that's what I saw there. I mean, cash is cash isn't?:p
     
    Last edited: Aug 26, 2012
  6. The-Truth

    The-Truth Regular Member

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    np, cash restricted assets are usually future plans for building or developing something.

    i.e. "cash restricted for future building" is cash but it won't be liquid. It will be classified as a long-term asset and therefore not readily avaliable to fill short term cash requirements.


    I looked at their financials really quickly and they look solid tbh. Now, financials tell only 1 side of the story, I haven't been paying attention to the news or current events so I can't make judgement there.
     
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  7. fezlopez

    fezlopez Registered Member

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    The-Truth,

    Man ( I think you're a dude), thank you for the info. Answer me some questions if you don't mind:

    Looking at their filings, I see on the sheet "Unaudited" and below it showing some details of course. However, what is the meaning? Unaudited by who? SEC? IRS? How come?

    At the end of the balance sheet, (this part trips me up big time) I see Treasury and Outstanding. If I'm not wrong, if the Outstanding quote exceeds the Treasury quote, this means they are in debt? Or am I missing something? I'm looking at the first SEC filing submitted in 2012.
     
    Last edited: Aug 26, 2012
  8. The-Truth

    The-Truth Regular Member

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    lol, yes I am indeed a man

    Any statements made by the company this year will be unaudited. Audits happen by accounting firms at the end of every year (to make sure the company didn't make up their own accounting rules and pocket cash)

    Everything is filed to the SEC and the IRS will only come into play if shifty accounting practices have been discovered.


    what do you mean by outstanding balance? for what statement and sub heading?
     
  9. fezlopez

    fezlopez Registered Member

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    At the end of the balance sheet, there is Treasury and Outstanding next to each other.
     
  10. LeMerovigian

    LeMerovigian BANNED BANNED

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    I heard Samsung was due to make a killing? lol In today's market take a look at dollar tree & 99 cent franchises steadily climbing.
     
  11. The-Truth

    The-Truth Regular Member

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    send me the balance sheet and I will take a look.
     
  12. The-Truth

    The-Truth Regular Member

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    and where did you "hear" this from?

    - are they coming out with a new product?
    - are their 3rd qaurter numbers going to blow away investors?
    - are they going to hire a new CEO?