SEC Has Launched Investigation Of InterOil (IOC) Skeptics And Wants Their Emails To The Media
by ilene - June 25th, 2010 10:52 am
News about the SEC subpoenaing Sam Antar for 37,000 documents in their investigation of a California-based research firm called the Fraud Discovery Institute, a company belonging to Barry Minkow, another criminal turned whistleblower, continues to spread. Here’s Henry Blodget’s take on the question of who and what the SEC should be subpoenaing. – Ilene
SEC Has Launched Investigation Of InterOil (IOC) Skeptics And Wants Their Emails To The Media
Courtesy of Henry Blodget at Clusterstock
We’ve written extensively about controversial oil-and-gas exploration company InterOil (IOC).
Some people think the company has discovered highly valuable oil and gas reserves in the jungles of Papua New Guinea and that the stock will continue to be a home run. Others think the company is basically a gigantic fraud.
Among those in the latter camp is reformed fraudster Barry Minkow, whose company Fraud Detection Institute sells research to big investors and is now engaged in trying to blow the lid off what he sees as an InterOil (IOC) fraud.
Barry Minkow (in earlier days)
As the SEC’s earlier investigations of shortsellers David Einhorn and Bill Ackman has demonstrated, when a company’s stock is performing well, as InterOil’s is, the SEC tends to go after the company’s critics and shortsellers rather than the company itself--a habit that is bewildering and infuriating to those who respect the fundamental work shortsellers do. And that seems to be what the SEC is doing in this case.
At Portfolio.com, Gary Weiss reports that the SEC has subpoenaed Minkow and Sam Antar [SEC Crazy Talk, below], another former convicted felon turned whistleblower, to find out what they have been saying about InterOil and other companies in their communications to shortsellers. In a twist that will frighten advocates of free speech and journalist shield laws, the SEC is also subpoenaing communications Minkow and Antar had with journalists.
The target of the investigation is a California-based research firm called the Fraud Discovery Institute. [Sam] Antar happens to be friends with FDI’s owner Barry Minkow. And, like Minkow, Antar is a noted whistleblower on white-collar crime and securities fraud. He’s a former fraudster who masterminded the Crazy Eddie stock fraud in the 1980s. Minkow served time in prison for the ZZZZ Best stock swindle, but now is an ordained minister and preaches…
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Looming Lululemon Earnings Lifts Implied Volatility – Puts in Demand
by Option Review - December 9th, 2009 4:06 pm
Today’s tickers: LULU, XLE, OIH, JPM, IOC, CYB, AMSC, MW, SVU & JTX
LULU – Lululemon Athletica, Inc. – Investors are hoarding put options on athletic apparel maker, Lululemon Athletica, ahead of the firm’s third-quarter earnings report scheduled for release after market close. LULU’s shares rallied as much as 3.8% to an intraday high of $27.84. The stock is currently up 2.75% to $27.56 with 45 minutes remaining in the trading session. Some analysts expect the Canada-based company will record earnings of 19 cents per share on revenue of $111 million. Option traders hedged against an earnings disappointment by purchasing puts. Approximately 6,800 put options were coveted by investors at the January 25 strike for an average premium of 1.23 apiece. Put-buyers are positioned to profit if shares fall through the breakeven price of $23.77 by January’s expiration day. Mounting investor anticipation for third-quarter earnings and the increase in demand for option contracts on the stock boosted option implied volatility throughout the session. Volatility rose 10.85% from an opening reading of 59.93% to an intraday high of 67.52%.
XLE – Energy Select Sector SPDR ETF – Shares of the exchange-traded fund comprised of companies in the oil, gas, and energy equipment industries, fell 1% during the trading day to $54.30. A massive put spread by one investor indicates shares of the XLE may decline further by the time the quarterly December contract options expire on December 31st, 2009. It appears the bearish trader purchased 74,800 puts at the December 53 strike for 95 cents apiece, spread against the sale of 74,800 puts at the lower December 48 strike for 13 pennies each. The net cost of the pessimistic play amounts to 82 cents per contract. The investor likely holds a long position in the underlying stock. The puts serve to protect the value of the stock position in case shares continue to decline. Downside protection kicks in if shares of the XLE decline beneath the breakeven point at $52.18 by expiration on the final day of 2009.
OIH – Oil Service HOLDRs Trust – Shares of the OIH exchange-traded fund rallied 1.25% to $112.69 today. We observed bearish options activity on the fund despite the bullish movement in the price of the underlying. A put spread enacted in the January 2010 contract suggests some investors feel the need for downside protection through expiration next year. It looks like 1,500 puts…
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Joy Global Options Active at the Close
by Option Review - October 19th, 2009 5:04 pm
Today’s tickers: JOYG, PRX, POT, IOC, QLGC, CAT & IBB
JOYG – Joy Global, Inc. – The manufacturer of mining equipment used to extract coal, copper, and other minerals, realized a 6% improvement in shares today to $55.13. Large-volume options trading took place just ahead of the closing bell as one investor banked gains and extended a bullish position on the stock. It appears the trader originally purchased 15,000 calls at the January 50 strike on August 4, 2009, for a premium of between 2.00 to 2.55 per contract. Today, he seems to have sold all 15,000 calls for 8.10 apiece. Net profits received on the closing sale amount to a minimum of 5.55 each up to a maximum of 6.10 per contract. Depending on the price the investor paid to initially purchase the calls, he reeled in at least $8,325,000, and could have banked as much as $9,150,000, by selling the now deep in-the-money call options today. Perhaps hoping to accumulate additional profits by expiration in January 2010, the trader doubled up on call options by purchasing 30,000 lots at the higher January 60 strike for an average premium of 3.30 per contract. The investor may add to his profits if shares rally another 15% to surpass the breakeven point at $63.30 by expiration day.
PRX – Par Pharmaceutical Companies, Inc. – The distributor of branded and generic pharmaceuticals in the U.S. appeared on our ‘hot by options volume’ market scanner due to bearish options trading. Shares of PRX fell more than 5% to $22.51 after receiving a downgrade to ‘neutral’ from ‘buy’ at Bank of America Merrill Lynch. One pessimistic option trader initiated a credit spread on PRX using call options in the November contract. The transaction involved the sale of 2,500 calls at the November 22.5 strike for 1.47 apiece, spread against the purchase of 2,500 calls at the higher November 25 strike for 55 cents each. The investor receives a net credit of approximately 92 cents per contract. The full 92 cent credit is retained by the trader as long as the November 22.5 strike call options land out-of-the-money by expiration.
POT – Potash Corporation of Saskatchewan, Inc. – Shares of Canada-based Potash Corp. surged more than 5.5% to $102.90 today on speculation that BHP Billiton Ltd. – the world’s largest mining company – may be interested in acquiring the fertilizer producer. Option traders exchanged…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.