Dear Mr. Goldfinger: You do make some sense. Perhaps this is why I respect your posts, although, as you know, I am not short ASTN at all at this point in time. Still long and happily delusional about it.
The article you included in your post actually reaffirms my belief that Ashton will survive and THRIVE! As far as I am concerned, the more ECNs, the merrier. Why? It will mean that ASTN will have to:
1) compete day-in and day-out, which, in the long-run is very good;
2) validates the whole new world of ECNs, ATSs and VWAP systems within a secure/encrypted TCP/IP environment;
3) other players see big profits to be made, hence, others are willing to put capital on the line, this will send investment houses, who are behind in their systems, to ATG for advice/technology/partnerships;
4) NYSE/PHLX merger is a possibility
Am I deluded in speculating about #4, as your friend Dr. Suess believes? Perhaps, but I could let ASTN go to $0 and not worry since I have already paid for my position. Other longs may not have this luxury, but, the reasons I went long in the first place are still extremely valid and John Westergaard, who pointed me to the stock in the first place, may be eccentric, but he is NO fool! He saw all of this coming several years ago.
I am VERY impressed with you and your short friends being able to crank up the short interest in ASTN. Really, I am sincere when I make this comment. Tell us all on this thread: How many of those +1 million shares that are shorted are yours?
Bottom line: a short position of this magnitude will have to be covered at some point in the future. It can be done very slowly, with little to no impact on the price, or done quickly which is otherwise known as a short-squeeze. A stock like ASTN is vulnerable to heavy shorting activity, however, there are limits to how many shares can be shorted (unless some illegal manipulations are being used, as in the case of ACRT)
Shorts are typically not going to put the proceeds of their short sales into CDs - at least, I have never done that, and I doubt the proceeds that resulted from the short sales of ASTN have gone into US treasuries. That means that wherever that money was invested on the long-side, that investment needs to do pretty damn well in order that the shorts can stay ahead of margin interest expense, and margin calls in the event of a market downturn.
Some longs may buckle at ASTN's volatility. To them, I say, why did you buy ASTN in the first place? Enjoy the volatility and ride it out. Build a core position over time, and establish some shares as a trading position to pay for your core position. This strategy can work (it has for me)
To Auric, I say thank you. You keep me reminded of why short interest is important and how longs can benefit from your willingness to take the risk.
Have a nice day! |
