Is SYNA an anatomy of a Pump & Dump

While it has been a long time since I have found something post worthy to blog about I can't help but sit down on this one and put my thoughts to pen.

These are my own thoughts and should not be taken as investment advice if anything this is a cautionary tale on how retail investors get taken for a ride. Look at my warnings on Mezzi MZI.V and ZMD.V

DISCLAIMER

At the time of this blog Premarket I have not completed a long or short position but based on the chart will look to short once volume begins to fade in a few days baring a huge gap down like the last several run ups.

A pump and dump scam is the act of an investor or group of investors promoting a stock they hold and selling once the stock price has risen following the surge in interest as a result of the endorsement.

While it may be hard to spot these pump and dumps from a mile away when you look at them closely they are all the same basic make up. The stock is usually promoted as "the next big thing" with details of an upcoming news announcement that will "send the stock through the roof" a new product or an impending buyout for double the value it is worth. The details of each individual pump and dump scam tend to be different but the scheme always boils down to a basic practice of changing supply and demand. Pump and dump scams tend to only work on companies tend to be highly illiquid and can have sharp price movements when volume increases. Those behind the pump and dump increase the demand and trading volume in the stock and this new inflow of investors leads to a sharp rise in its current price. Once the price rise has escalated they will sell their position to make a large short-term return. Wash and then repeat for as long as they can.

For example

Synaptics the maker of touch-screen technology used in mobile devices (well apple has already announced reduced sales of the iphone) and computers, is moving closer to a deal with a state-backed Chinese investment group that values the company at more than $110 per share (who ever gave it this price target probably has shares to dump), according to people familiar with the matter. (Unnamed sources)

An agreement could be reached in early March after the Chinese New Year (February 8th is the Chinese New Year nothing to do with mid march, this has no bearing on the deal just a hype factor), according to the people, who asked not to be named because the negotiations are private, (Leaked information from unnamed sources). San Jose-based Synaptics rejected a $110-per-share offer last year (did anyone actually see this offer?), a 70 percent premium to where the company was trading at the time.

Talks with the Chinese group have continued in recent months, and Synaptics is ironing out details of a transaction valuing the company at about $4 billion, the people said. No final agreement has been made and talks may still fall apart, they said. (Covered their buts clause in every leak)

Synaptics doesn't comment on rumors or speculation, Chief Executive Officer Rick Bergman said when reached by email. (in other words this is not true)

Chinese buyers have targeted U.S. semiconductor companies to improve the country's domestic technology. The country buys more than half the semiconductors sold each year, and its share is growing. Yet the nation doesn't have one domestic manufacturer among the 10 biggest chipmakers, a list stacked with U.S. companies. (All of who could have been bought for much cheaper than this supposed deal)

To me the final reason behind this is simple on September 29th 2015 this stock spiked if you look at the reason why it was the exact same rumour with the same details. In 5months you have nothing new to add meanwhile insiders have been procuring and dumping according to several SEC Form4s. Insiders hold less than 250,000 shares or 0.46% of the float and they dump as soon as they acquire more? This is a huge red flag for me makes this my BUYBEWARE pick of the month. Someone always hold the bag don't let it be you on this one.