Paul, assuming that CC will know before us low earthling, what is happening at VLNC, the continuous shorting is a no lose situation, IMHO. The fact that they get a "10 days look back" conversion price, allows them to short everyday about 30,000 shares. At the recent rate of decline this is less that the increase in coverage their floorless gives them. They have already captured (assuming they shorted 1.25 MM shares above the ceiling) their investment and then some, now everytime they short more, it is pure profits, assuming their covering is below their average additional (above the original 1.25 MM shares). It is shorting with impunity, because even if VLNC suddenly announces a major material event, and the stock doubles in one day, CC can cover the short by converting then (at a price well below that one day wonder, since they chose the 6 lowest bids of the last 10 days, if memory serves). If VLNC finds additional roadblocks to commercialization, the shorting itself could bring the stock into the death spiral we discussed earlier this year.
Zeev |
