Roger
In theory, it sounds good, but in practice it rarely works as any seasoned pro will advise you. In fact, even when some longs were able to corner a market in a small capitalized stock and then pulled in the shares they had loaned out, they got into all kinds of regulatory trouble. I don't remember the specific instances, but I do recall reading about it. Perhaps some securities lawyer, if here, could chime in?
The bulk of our original purchases were made last July under $30
and mistakenly we didn't sell it at $50. So it was up for a day, but what good did it do us. At least we got the interest on the stock that was loaned out.
But let me leave you with another scenario, the one I would be hoping for:
1. The short position continues to grow
2. Natural buyers come back into Cube and as the earnings increase in the second half of 1997, the price rises again to $40 and the shorts haven't covered.
3. The public gets interested in the investment opportunities in DVD and then the real move in C-Cube starts.
4. The shorts panic and find that the rest of the world is trying to buy the stock while they are trying to cover their short position.
I bought Cube stock on Friday, and will buy more on Monday. I will lend it out to short borrowers. Sometimes you give a fish some more line before you hook him and reel him in. |
