New 5% Holder Has Also Shorted Puts At 260,000 Shares (By Option) At $2.50 Per Share…

A fairly strange new major holder crossed the five per cent line as of July 11, 2017. [I need to get to a client dinner, right now — just saw this — so, I will look at this in detail later tonight, and may well add to or revise my thoughts.]

I say strange because an affiliate of the holder has also “sold short in over the counter market American-style put options referencing an aggregate of 265,000 Shares and 20,000 Shares, respectively, which expire on July 21, 2017 and October 20, 2017, respectively, and have an exercise price of $2.50 per Share….” So if I understand this correctly, about one eight of the new holders shares are subject to shorts — at a strike of $2.50.

And so, it is just a little puzzling that the stock rose nearly seven percent on the day — albeit on low to moderate volume. Though to be fair — Eric Singer (the controlling person of the holder) has been seen as a hedge fund rising star, in at least some circles.

Here is the link to the Schedule 13D, just filed earlier today.

We also are given to understand that there may a very fascinating story told, out of one of the contacts from the company — perhaps as early as Monday.

2 thoughts on “New 5% Holder Has Also Shorted Puts At 260,000 Shares (By Option) At $2.50 Per Share…”

  1. Remember, any trade has two parties. If someone wants to short puts (essentially selling puts you don’t own and putting up the cash as collateral, betting the price of puts falls, whereby they can be bought back for less money to make a profit, which would only happen if the price of the stock rose), there needs to be another party that takes the opposite side of the trade. In this case, the broker who would then make another trade (buy the stock or buy calls on the stock) to eliminate their risk. That the stock price rose suddenly today is confirmation of that.

    I don’t think we’ve seen many of these kinds of trades in MATR and a person would have to have some solid belief the stock price will rise significantly in the short-term, based on the expiration. To do so on a mere hunch, given the history of MATR, would be equivalent to volunteering for a psychiatric hold for observation. It is logical to assume that this person has some information that is not well-known by the investing public. This screams out for a call from the local SEC office.

  2. What makes a “hedge fund rising star”? Was Bud Fox a “rising star”? Lots of hedge funds are closing down as they can’t beat the S&P 500,. It appears that the equivalent of a hedge fund rising star may be only a guy who has flipped a coin, came up heads 10 times in a row and thinks it’s a skill and has convinced other “smart money” guys to bet on his coin flips.

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