Yesterday, August 3, at 1550 EST, Joseph Charles brokers once again revealed that they still possessed ample NWCM shares to sell, and were quite willing to flush them down the toilet by entering sell @ market orders into a very thin market at the end of the day. The majority of those orders were entered by the Joseph Charles Boca Raton, Florida office. The account executive in question has sold more than 50,000 shares from his own book over the last 30 + days. I sincerly hope all his clients authorized those trades.
It is becoming increasingly evident that Joseph Charles & Company is a holder of an open short position in NWCM. The size of their short position will become more apparent with time. I personally have never subscribed to the theory that the Aura noteholder was the "short presence". As an ordinary shareholder, I have periodically attempted, over the last 60 days, to borrow shares to short against the box to protect my long position from the unscrupulous selling by the JCC brokers - with scarcely any stock available. Therefore, the bulk of the short selling is not from your average shareholder, but from a market-maker, who does not have to borrow the stock (nor, in some instances, even declare his short position). It is therefore possible that the open short position in NWCM even exceeds the "official" 1.15 million shares.
JCC will have to cover those shares. The magnitude of the "squeeze" depends on two things - how many shares they are, in fact, short - and the first installment (of four) of their option to purchase 250,000 shares of NWCM at 13.78 which kicks in in September. They will be able to deliver shorted shares against 62,500 shares, should it be economical for them to exercise that option.
Much as it distresses one to contemplate it, it is also possible that Aura themselves have used a market maker to short shares to protect their 6.8 million share postion. I sincerely hope this is not the case.
As many of you know, Michael Rappaport is a director of the Company. He is also a former director of JCC, and now a managing director of EBI, the investment banking firm closely associated with JCC. I strongly urge all shareholders to vote AGAINST the re-election of this director. Although AURA holds the majority of the shares, and therefore the majority OF the votes, WE SHOULD DO OUR PART. I also urge Aura and Harry Kurtzman to remove this insidious presence from the NWCM board - he has done nothing, can do nothing, and will do nothing for the Company.
Finally, the proxy statement reveals that Mellon Bank (Dreyfus) owns 1.1 million shares of NWCM. This seems to contradict recent figures that Dreyfus was down to approximately 780,000 shares. The proxy says, however, that this figure was taken from a 13G dated January 29,1998 (prior to the Dreyfus sales in February)
It is possible that JCC brokers could force NWCM even lower - although I do not believe they possess the gunpowder to do much more damage. The possibility of a short squeeze of some magnitude is increasing, and there are certainly no fundamental problems with NWCM on the immediate horizon to cause any additional selling. Frankly, with downside in the stock a maximum of 2 points plus or minus, and upside unlimited, it doesn't take a rocket scientist to figure the odds. |
