Yet trading in Mellanox's share on Thursday was exceptional by any measurements. Not only by the much smaller than anticipated fall but also in trading volume - 11 million shares changed hands compared with an average daily turnover of 1.4 million shares. Even in the dramatic days of recent months, for example following the lowered expectations at the beginning of January, or the disappointing forecast for the fourth quarter in October, trading volume was far lower than that recorded last Thursday.
As of last week there was a balance 17% of all Mellanox shares on short trading, and in all likelihood a large percentage of shareholders rushed to rid themselves of the share, believing that the falls had been fully realized, and finding themselves on a short squeeze. Another explanation as to why the fall was relatively modest was that one or several large bodies bought large amounts of shares for hundreds of thousands of dollars.
If there was indeed a strategic investor, it could well be Oracle Corp. (Nasdaq: ORCL), which already holds 9.8% of Mellanox, and may have decided to take advantage of the fall in the share price to raise its stake. Originally Oracle acquired 10.2% of Mellanox shares and according to Mellanox management was not supposed to buy more. But maybe things have changed. Alternatively, the buyer could be a financial institution exploiting the situation to make a strategic investment. In several weeks, we may discover who bought the shares, especially if the buyer was Oracle, which will be required to report the acquisition.
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