Greetings, I'm an avid lurker here, but rarely post. Thanks to all who share their excellent DD on this thread. This is my take on the shorts FWIW. It may even be a plausible explanation for your questions about why a short position (allegedly) exists on GIFS.
The owners of the restricted shares which are under dispute shorted against these shares last fall, either to lock in profits when the stock was flying high, or because they carry a grudge against GIFS, which has been widely rumored by Waacko and others. Then they were caught short when GIFS blocked the registration of the disputed shares, unable to use them to cover. So, instead of purchasing shares to cover the short, they shorted some more to keep the price down until the matter was resolved. The matter dragged on longer, more good news came out, they had to keep shorting to maintain the account, that is if you believe the infamous "rolling" short position saga of December '96. Sort of a vicious circle, as long as the shares are tied up and good news keeps coming in. What would break the cycle in the short's favor would be either their shares becoming free trading (sounds unlikely) or a big tank in the stock price (i.e. very bad/no audit results).
What would break the cycle for GIFS shareholders would be continued positive news/earnings reports which would bring in enough new investors to blow the share price up to the point where the shorts cannot control it any further, and they are forced to cover. If they can.
My interpretation of what greg martz is telling us is that the shorts are way out of control. This is obvious, if the rumored short position is accurate, since the public float is smaller than the short position. So the shorts continue to fight a desperate battle to keep the price down to avoid covering, which would be absolute disaster. They just keep on shorting, since they have no alternative at this point, no hope of covering at any price. If the story is true, something has to give.
Is there a meltdown coming? Who knows. Correct me if I am wrong, but if there is a short position of 1,000,000 shares and a public float of 900,000 shares, then there are 100,000 shares that have been sold to someone out there (like me, for instance) that simply do not exist. Sounds like a good reason to have certificates in hand. In fact, I think I'll call my broker right now.(g)
Seem like an "end play" strategy in this game. In about 3 weeks, the game should end, and we will all see who wins.
I may be totally off base on all of this, and I am certainly no expert. It's just my opinion, based on information and rumor gathered from this thread, the company, and the SAC.
Return to normal lurk mode.
Mike R. |
