The Wolf Pack - A Strategy Most of You Probably Have Never Heard About
In 2013, Nasrat Hakim left Actavis to become the CEO of Elite Pharmaceuticals. It was on the heels of a strong legal move that Actavis made on a patent dispute and was able to access a drug earlier than other competitors. Hakim likely parlayed a role in that to move to earn a shot at a CEO position. Careful what you wish for though - although there was excitement for an Anti Abuse technology, he may have not realized he walked on to a ship where he was in charge of rearranging the shares on the Titanic. Luckily for Elite, Nasrat refused to accept defeat and pivoted the company. That's a story you've heard me detail before though. Right now, you're going to learn about The Wolf Pack and what happened at Actavis almost immediately after Nasrat left.
Bill Ackman, CEO and Founder of Pershing Square, a hedge fund, made an agreement with Valeant to buy 10% of Allergan. Once their position was made known, they made an offer to buy Allergan for $46 Billion. The CEO famously said he felt "surrounded by a wolf pack" to describe the situation and phrase stuck. Actavis stepped in, debatably as a White Knight and debatably with their own motives, to buy Allergan for $66 Billion. Ackman made $2 Billion off of the move and Valeant picked up a nice $400 million for being part of the wolf pack.
How does this apply to Elite Pharma?
The players in the move above decided to act in coordination to make a move on a company, but individually they had no legal requirement to file a 13D since they did not have a position over 5% at the time (there's some gray area here legally, but it's inconsequential at this time for this part of the story). Once the wolves had accumulated their position, they then filed the required legal forms and made their move. That is what a wolf pack now describes, a group coordinating a move, riding a legal line, in order to quietly gather up shares to make a move. The move does NOT need to ever be filed unless they decide to formally combine forces right before an announced move (they would they file a 13D, or, less likely, a 13G). The whole pack moves quietly in the night. The smart ones already know where this is going...
Wolf Packs do NOT have to coordinate a long effort - they can be shorting and suppressing.
What does a Wolf Pack move look like in reverse? It's a move coordinated in the dark to hide the intentions of the group. BUT WOLV!!! What would that look like? Glad you asked:
Coordinated fear posts being spread that would be obvious. Obvious how? The same posters who were spreading fear and lamenting the "loss" on their stock shares would CONTINUE to post negative things about the stock as their supposed shares when from 2.7 cents all the way to 82 cents. Which is interesting because when MY shares went from 2.7 cents to 82 cents, I sure wasn't posting horrible things about the stock. That sounds crazy if you're naive. It sounds intentional if you have a single brain cell.
They would put themselves on boards so they could ban positive posts and flood any person who is gaining attention to undermine them. FakeQueen/IrritableBowels had two accounts as mods on Ihub and they would ban anyone who gained too much attention. The only ones they couldn't ban were the positive posters who were mods as well The only reason she got removed as a mod is because she got too arrogant and started making antisemitic remarks to one of the posters and booted from the role. No2Koolaid was an infamous poster on this stock who worked in finance at a Fortune 50 company. He was harassed constantly and a huge nuisance to the FUDsters. They were elated to hear of his unfortunate passing a few years ago, and I truly wish he were here to help battle them.
Unusual Trading Activity - spoofed orders, dragging the bid, washed trades.
Paid accounts and bots - Look at the accounts commenting on FUD - look at the number of purchased Reddit accounts commenting FUD on this stock. Look at the number of brand new accounts with negative karma spamming posts and negative comments. And look at what they say - NOTHING. Not a single iota of actual reasoning or research. Just fear, hate and fud.
Reasonable people have asked "where is the proof of shorting?" Of course there is naked shorting, but you don't NEED to naked short with a Wolf Pack strategy. It's right out there in the open. Over 50 FUD posts have been deleted from the other ELTP forum in the last 40 to 45 days alone.
So how do we fight a Pack of Wolves?
There are three ways to fight them.
Report them to the SEC and the FBI - go for it if you want. A forensic accountant who specialized in fraud reported Bernie Madoff for 12 years with no luck. Criminals know the government isn't going to do anything about fraud. Vlad openly robbed the public. Senators trade on inside info daily.
Form a counter attack through an investment vehicle/LLC/group - I guess possible but highly unlikely for a stock this small. I own more shares than everyone in the C-suite except for the CEO himself. And to be clear, I'm probably obligated to say I'm specifically NOT advocating for this as that would likely trigger a general solicitation and a 506C filing.
Look the other way and profit off of their efforts - I've kind of taken this approach, but I can't keep my mouth shut. So, I wouldn't say I look the other way. I clearly call them out all the time, but I do acquire shares more aggressively the more I feel like they have suppressed the stock. Look at the fundamentals. The PE ratio is criminally low.
