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Why Martin Shkreli ONLY Cares About KaloBios Pharma's (KBIO) Stock Price

November 27, 2015 8:44 AM EST

Photo source: Twitter

In a Bloomberg interview Wednesday, newly minted KaloBios Pharma (NASDAQ: KBIO) CEO Martin Shkreli said "I don't care about the stock price" when asked questions about it. This answer seems to directly contradict with his latest move announced on Thanksgiving to stop lending his KBIO shares.

Given that Shkreli's group controls 70% of the outstanding shares this is wreaking havoc in the already chaotic situation. Shorts, which were already being squeezed hard, are now near death's bed with the stock up 65% to $43.90 in pre-open trading Friday. With the move, Shkreli has created a Volkswagen-like mother of all short squeezes.

But back to our point, Shkreli said he doesn't care about the stock price yet he is making this aggressive move against the shorts in a clear act of manipulation to drive shares higher... hmm.

Lost in all of this is that the moves he is taking could actually backfire. By taking 70% of the shares out of rotation, he is basically taking a dagger to liquidity. Also, Shkreli said in the Bloomberg interview that the company will need $100 million to bring its drug to market... that's of course if it even works. He wants to eventually raise money, but what institution will buy into a stock that is being clearly manipulated? "Your stock is trading at $40, it's only worth $5," is what they may say. Also, a few weeks down the road, traders may move on, and the remaining 30% of the stock that is being flipped back and forth could be sitting pretty on the pink sheets given that the company is late in filing its 10-Q.

Remember, Shkreli can not sell the stock right now, so the tens of millions he has made off the epic short squeeze could all be all for naught if shares come crashing back down to earth.

Shkreli might be pretending he is taking the high road regarding the stock price, saying he only cares about getting drugs to patients in desperate need. However, his actions speak louder than words. In all of this, there really is only one clear thing - Shkreli ONLY cares about the stock price. And like some evil game he is going to extremes to drive it higher.

The SEC and FINRA are likely closely probing this situation. While it is unclear if any laws were broken in all of this, it sure smells like stock market manipulation to us.



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