Hold The Mayo:
Why blame the fumble of Coulter at the FDA on Avalon?
Agreed, this was a CLTR fumble and a good call by Avalon. I don't think AVLN's decision not to immediately cover their short in the immediate aftermath was smart, though. Shorts can fall in love (hate?) with their picks just as easily as longs, though, and perhaps that's what happened here. (At this point I'm personally pretty long CLTR, and hoping for a nice pop on Monday.)
You have to understand that most (all?) biotech investors feel pretty antagonistic to the shorts. It's very easy for a hedge fund to pick on a fairly thinly traded biotech and say enough nasty things to have an impact on the price in the short/medium term. With news at most biotechs very intermittent, and the progress of many projects hidden from investors, it's easy to sow doubts. ("Informed sources at Pharma X says its project with Biotech Y is circling the drain...").
Now Avalon actually seems fairly responsible, and I haven't seen much in the way of these sorts of unfounded rumors swirling around their shorts. (You inevitably get some tag-along shorts that will play some of these games on their own, though). However, pretty much all biotech investors aren't going to be making fine distinctions here, and will be quite happy any time a biotech short gets it in the teeth.
Peter |
