I.N. The price has gone to $4, that is pretty close to $3, in my book, and the year is not over. Most of the buyers this year, those that would take short term capital gains to offset winning positions elsewhere are in the red, since we are near the low.
As for the stock selling well above its book value, well, it selling at an infinite multiple of book, since book is negative (well, it recently turned positive with the injections of "on time financing" and the partial CC conversion), and in such cases, whether it is $4 or $8, it is still infinite. I think that a good part of the partial resilience of the stock is the adroitness of the new CFO in managing the financing under less than optimal conditions.
Frankly, I do not know how you can determine from the trade by trade information on level II whether the stock is managed or not. The fact is that the recent rally just above $6 met with heavy selling, and I would venture that a lot of this selling was shorting. I personally doubt that a lot of shorting by CC is going on under conversion ceiling, they are probably partially responsible for the resilience, when covering some of their short position at the $4 to $5. A hedge fund would not risk shorting naked in a situation like that. They would start an avalanche shorting only if they see a chance of a spiral developing (namely, they also think that delivery of a PO in the next six months is doubtful), they may not think that this is in the cards. The fact that they did a partial conversion indicates to me that the end game "might" be close, but there is a difference between might and "is", and for my own I would rather wait to see the turn around first, I do not think there is any rush.
Zeev |
