The NAKD war of attrition: FTDs and the October share price.

Though the share price is somewhat down over the month of October, it has remained steady in the $.7-$.6 range. This is significant because of the placement of the most recent FTDs from September (reported here). While there is little that can be gleaned directly about the nature of FTDs from these reports, it is reasonable to assume that the most recently reported ones are most likely to still be in limbo regarding settlement (the same assumption cannot be made so easily for older FTDs). The FTD data may be grouped into price ranges accordingly: Price Range # of Shares Failed-to-Deliver Dollar Amount $.8-$.72 335,838 $251,363 $.7-$.6 3,001,892 $2,011,551 $.59-$.55 370,054 $215,493 As I said about FTDs above, there's a lot that can't be known. What is available on Fintel and the SEC site may just be one snapshot of a very rapidly shifting, high-frequency trading scenario. (I.e., it may be possible to play musical chairs with FTDs to report less.) That said, the table above provides a useful representative distribution of the data. It demonstrates that, however many FTDs may actually exist from the previous month period, these failures-to-deliver cluster around the $.7-$.6 range. Moreover, of these FTDs from 8/27 to 9/30, 67% are on the share price of $.67, with $1,658,062.40 worth of these $.67 failures-to-deliver occurring on the single day of September 3rd. (Anyone have any theories as to why this day?) Not only has the October share price held in the $.7-$.6 range at close, but it has also closed on $.67 four times: $.675 (10/1); $.6756 (10/13); $.6733 (10/15); $.67 (10/18). October has been a massive war of attrition for the HFs. Because the share price remained within the $.6-$.7 range, it is inevitable that the FTD bag started in the previous month only accumulated over this time. It is possible that a breakthrough at this point to $.67 would test the tinder box which may have a cascading effect in terms of triggering forced buybacks / margin calls for FTD positions likely still held from previous months when the numbers were staggeringly higher (and so unlikely to be settled easily and rapidly). The SEC historical FTD data reports well over 100m FTDs since January, the vast majority of which are below $1. Here's a quick math to think about how high the FTD daisy chain might pop: Jan 25: 12m FTDs at ~$.4. Jan 31: close at $1.65, or 4x price of Jan 25. Mar 23-Jun 23: three massive FTD spikes of 23m (Mar 23/24) at $.77, 28m (May 2) at $.71, and 36m (Jun 3-6) at $.82-$.7. The weighted average price point of these spikes is $.76 and the total amount of shares failed-to-deliver is 87m. Given that 12m FTDs caused a 4x increase, 87m should cause an increase of 7.25x. 7.25 x $.76 = $5.51. This is just the expected increase for the FTDs from March to June, not accounting for the activity since and the October action discussed above. Typically, FTD cycles have a short-ish period between FTD spike and share price spike (see here). Shorter is better for the shorts since, even if they take an L, they are exiting bad positions without taking extra bags. Longer gaps between FTD and sp spikes imply higher price increases since more FTDs will have accumulated (and continued to remain unsettled). The war of attrition is real and the evidence points to retail hodling and HF hurting.

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The NAKD war of attrition: FTDs and the October share price.

bullish
Though the share price is somewhat down over the month of October, it has remained steady in the $.7-$.6 range.
 
This is significant because of the placement of the most recent FTDs from September (reported here). While there is little that can be gleaned directly about the nature of FTDs from these reports, it is reasonable to assume that the most recently reported ones are most likely to still be in limbo regarding settlement (the same assumption cannot be made so easily for older FTDs). The FTD data may be grouped into price ranges accordingly:
 
Price Range
# of Shares Failed-to-Deliver
Dollar Amount
$.8-$.72
335,838
$251,363
$.7-$.6
3,001,892
$2,011,551
$.59-$.55
370,054
$215,493
 
As I said about FTDs above, there's a lot that can't be known. What is available on Fintel and the SEC site may just be one snapshot of a very rapidly shifting, high-frequency trading scenario. (I.e., it may be possible to play musical chairs with FTDs to report less.) That said, the table above provides a useful representative distribution of the data. It demonstrates that, however many FTDs may actually exist from the previous month period, these failures-to-deliver cluster around the $.7-$.6 range.
 
Moreover, of these FTDs from 8/27 to 9/30, 67% are on the share price of $.67, with $1,658,062.40 worth of these $.67 failures-to-deliver occurring on the single day of September 3rd. (Anyone have any theories as to why this day?) Not only has the October share price held in the $.7-$.6 range at close, but it has also closed on $.67 four times: $.675 (10/1); $.6756 (10/13); $.6733 (10/15); $.67 (10/18).
 
October has been a massive war of attrition for the HFs. Because the share price remained within the $.6-$.7 range, it is inevitable that the FTD bag started in the previous month only accumulated over this time. It is possible that a breakthrough at this point to $.67 would test the tinder box which may have a cascading effect in terms of triggering forced buybacks / margin calls for FTD positions likely still held from previous months when the numbers were staggeringly higher (and so unlikely to be settled easily and rapidly). The SEC historical FTD data reports well over 100m FTDs since January, the vast majority of which
are below $1.
 
Here's a quick math to think about how high the FTD daisy chain might pop:
  • Jan 25: 12m FTDs at ~$.4.
  • Jan 31: close at $1.65, or 4x price of Jan 25.
  • Mar 23-Jun 23: three massive FTD spikes of 23m (Mar 23/24) at $.77, 28m (May 2) at $.71, and 36m (Jun 3-6) at $.82-$.7.
  • The weighted average price point of these spikes is $.76 and the total amount of shares failed-to-deliver is 87m.
  • Given that 12m FTDs caused a 4x increase, 87m should cause an increase of 7.25x.
  • 7.25 x $.76 =
$5.51.
 
  • This is just the expected increase for the FTDs from March to June, not accounting for the activity since and the October action discussed above.
 
Typically, FTD cycles have a short-ish period between FTD spike and share price spike (see here). Shorter is better for the shorts since, even if they take an L, they are exiting bad positions without taking extra bags. Longer gaps between FTD and sp spikes imply higher price increases since more FTDs will have accumulated (and continued to remain unsettled).
 
The war of attrition is real and the evidence points to retail hodling and HF hurting.
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read-time
3 min

5.51

Target Price

10/ 10

Confidence

1-2 Months

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