SASQUACH, before you begin, a good description of what is going on was on the front page,C section, of the Wall Street Journal, March 23, 1998.
ACRT is obviously a fine investment. Rated as one of the magic 25 by individual investor for 1998, as well as 1/2 a dozen more publications and sources. Their earnings speak for themselves.
About December, ACRT was seriously oversold due to all the publicity, and was priced about 30.
A group of somewhat shady investment managers and houses started shorting the stock, assuming it would go down. Nothing wrong with that, but, they went one step further. They have Mr Pink, start slandering and lying about ACRT, it's management, accountants and everyone else associated with the company.
They called up ACRT customers and said ACRT was going out of business. they did the same with insurance Companies as well as personal friends and contacts of key management personnel.
The price was driven down to below 11 on the slanderous garbage, and the fact that shortsellers far and wide jumped on to grab some of the profits as the shortselling frenzy continued.
Key West Securities, posing as a real analyst group, issued a sell recommendation on ACRT. The next day, they are temporarily out of business as the SEC is searching for their management to subpeona for another stock manipulation case. Further, it is discovered they hold a large short position of ACRT. They are tied in with Dan Loeb, of Third Point Management, and it is discovered they have joint offshore accounts. Mr Pink, works for Dan Loeb, usinf information Loeb supplies him in a twisted and maligning fashion.
When the dust settled, it was discovered that so many people shorted this company out of greed, that over 50% of the tradable float is now shorted. It will take 10 solid days of nothing but buying for them to cover.
Further, 25% of the tradable float is now owned by funds and institutions.
This has created a short squeeze. The price will go up due to a lack of tradable shares, and as the price goes up, the shorts will be forced to buy back the shares they shorted to cover their position, forcing the price even higher.
This is a very brief synopsis. For more in depth information with good links, ect I'd suggest you try wading through the Yahoo thread as well. Copies of all the Individual Investor reports can be found over there as well.
Here's their link: messages.yahoo.com
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