Earlie, RMBS will split four for one around June 15th, this split and the existing short position will probably hold the stock at its current lofty highs and provide few more highs, IMHO. Maybe RMBS is destined to get lofty valuations in the "ludicrous" range, thus, I for one, will play it on the long side, but from here on, only "opportunistic" positions. Additional fuel to the rally may come from later announcements that MSFT's box will have RMBS memory. At current prices and market conditions, I think that MU is the better short since within the next two three weeks, the forced conversion should be announced, IMHO, and the stock resulting thereof, which was not already hedged, will come out. Furthermore, the herculean efforts of the "powers" to keep the stock above $88 for a month will no longer step in to buy. I would say that a fair peak value for a manufacturer in such a cyclical industry should be no more than 10 times its peak earnings, and I would be extremely generous to assume such peak earnings to reach $6/year.
Good luck out there
Zeev |
