In the spirit of being transparent, I thought I should give an update on my positions on UMS.
Based on the last portfolio update in Jan earlier this month, I have provided an overview on my portfolio that I am holding a rather large short position in UMS of 325,000 shares.
This was accumulated over time since my earlier position back in Nov 18 when I started to short from 66 cents, all the way down to 59 cents.
My average price on this position was somewhere around 63 cents I think (before the interests).
My plan was to continue to hold this short position until somewhere in mid-February when they had to announce their full year results before closing off the positions.
With the revised 2019 negative guidance from the Wafer Fabrication Equipment (WFE) latest research paper, I was pretty confident holding on to this until I received a call this afternoon from an unexpected caller.
It was a call from the brokerage I had used to short this position.
In the call, she mentioned that the company has stopped issuing all borrowed shares to the brokers and that the brokerage is no longer able to continue to take my positions on a large amount.
I wasn’t exactly quite sure what was happening at that time so I get my friends to check on other brokerage platform that they are using and the results were the same.
In essence, I was given no choice but to force close the position by end of the day because there were no more stocks to short, or they will force close it on behalf.
Either way, there were only one option.
At around 4pm, I had to close all my position at 62 cents, and given the number of weeks I have held this position, I assume the interests are going to add up by quite a bit.
I wasn’t too happy with the way this was handled, in particular with the short notice given to me and also the fact that I am already inside the position means the brokerage could have honoured and taken the market maker role in it, but I think they wouldn’t as a company.
I have escalated the matter to see if I can get some sort of compensation in the form of interests or commissions waiver so they’ll get back to me about that.
I think this is definitely a new learning platform for me because this is something that I definitely wasn’t expecting when I took on the position.
All these time I was focusing on my margin risk and didn’t expect that an external factor like this can make or break the strategy with a single blow.
With the covering of the position, it means I suddenly have a large pool of warchest back into my disposal (large by my standard as I don’t usually keep a lot of cash) which I will need to find the right company to allocate over time.
Thanks for reading.
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