Larry,
<First, I find it hard to believe that Castle Creek has not shorted a single share. They are the only ones who could short with no risk (as long as the price was above $6). It is hard for me to believe that there is over $18 million bet on the short side, and none of that is the responsibility of Castle Creek.>>
Agreed, it is hard to believe, but I had heard from another Chicagoan who knows CC well, that they were not shorting. Incidentally, my source is one of the biggest shorts in the market, he would know. He is not short VLNC incidentally.
<<Second, as far as Castle Creek being "hand picked." Nobody "hand picks" a floorless financing unless they have no other choice. Period.>> Agreed also, but I really believe there is more to their relationship than your everyday financing. CC is in business to provide finacing, if you do this to your clients, you won't get many more. At least not desireable ones.
<<Third, you say, "The fact that the company hasn't tried a "fluff" PR (most companies would have), suggests a level of confidence that should truly have the shorts wondering exactly what Lev knows that they do not." Some might consider "on the cusp of production," and unquantified POs from affiliates to be fluff PR.>>
We've both seen some serious fluff PR from companies, I would hardly include these in that category. The lack of any PR in the face of a short run is what is really most important.
<<Fourth, you say, "Notice that they are only borrowing on a month to month basis now because of the current low share price. If they were concerned about their future, they would have gone for the full enchillada in the $7's and raised like $30M all at once." That, of course, assumes somebody was willing to give them $30 million all at once. Even if this was the case, this strategy now appears to be a mistake.>>
As of today, yes. Let's explore this point again in the near future.
<<So the supposed strategy of minimizing dilution so far has added to the dilution.>>
Any issuance of shares adds to the dilution. Whether or not this strategy is correct, we will know in the near future.
<<Finally, as far as the shorts being worried, the evidence does not support this claim. The stock is still under pressure, even at what now appears to be a low price.>>
Of course the stock is under pressure, there is more selling than buying. This is very easily accomplished by shorting more shares than are being purchased on a thinly traded stock. This is why the stock is going down, there is no mystery. The ever increasing short position, must buy these shares back at some point. Since the stock is relatively thinly traded, trying to acquire 2.5M shares without doubling or tripling the share price is not possible, unless most of them are shorted by CC. The short's only hope of closing their position is if they can force VLNC into bankruptcy. Since Lev and crew know from already booked sales that they will be profitable in a quarter or two, bankruptcy is not in the cards. If I held a good portion of the short position, I'd be plenty worried. One good P.O. could cost them $40M overnight.
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