I am trying to figure out how this "short against the box" really works. Say I am an Intel and I have lots of shares that I just can't or don't want to sell. The price of RSYS goes up and I sell short against my own shares to protect my price level at this point, say $55. I still need to borrow the shares to sell short because I am not going to sell my own shares, but I can use my shares to pay back the loan at anytime especially if the stock goes down. At this point I have locked in my price, but I have also blocked any further profit on my shares if the stock continues to go up because I have those shares sold short. I am not a typical short-seller, however, because I don't get panicky when the stock price goes up because I don,t have to buy to "cover" my short position because I already own the shares. My short position is not stimulatory in a up market, in fact, since I have done this with a million shares (25%) of RSYS's float, I am a drag on the "up market" and RSYS always quickly breaks down rather than holds at higher levels as soon as the buying slows.
The stock goes down again but I still don't want to sell all my shares to close my short position because I would really tube the stock of a company that buys my products and that I want to succeed.
Now I am Brian Turner and group, and maybe I have assumed, as this Thread I think had assumed, that the large short position against RSYS's stock were those stink'in mm's jacking the stock around for quick bucks. But then somebody posts on the RSYS Chatline that the shorts may be against the box of shares owned by Intel or Tech. We huddle together and say this makes sense because the huge short position doesn't seem to change much whether the stock is high or low, which you would think would change if it were regular short-sellers. We also know that we want more price stability and more shares outstanding so our stock can go up and stay up. We know we have to drastically lower this short interest and we know that John Q Public doesn't have that many shares. The shares have got to come from the funds that hold most the stock.
We decide to throw a few curves out at the upcoming Red Chip Review aimed directly at the Funds. Horrific statements such as "exposure to SOUTH EAST ASIA" and target stock prices of $55 in 12-18 months send chills down the back of shorter term Fund Managers. Now Fund Mangr. #1 talks with Fund Mangr.#2 and says, "Did you hear what Turner said at the last Red Chip conference?" "Yes, and I am not going to hold this stink'in stock for no rotten 18mos. to just get $55 out of it when there are other stocks soaring all around us. The funds sell big time starting 3/25--almost a million shares in three days. John Q public is not sucking all this stock up otherwise the price would be below $20.
I am Intel again, and all of a sudden I see all these shares coming out at below key support of $34. I still don't want to or can't give up my own shares to cover my huge short position so I elect to by the shares at these low prices to close out. I don't believe I have to file a 13D or 13G because I am not adding to my current position, I am just paying back shares I have borrowed and sold.
If this is what has happened then we should see a huge drop in RSYS shares short in April's short data, which is due 4/15 and will be out about 8 days later. I am hoping this is exactly the case. I would then believe that this is the last time you'll see RSYS at these prices and it will hold at much higher prices, perhaps much higher than $55.
Bill
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