Jeff,
I have already read the article. Keep in mind that the numbers were as of April 15th. Many of these "dangerous" stocks already soared last week (undoubtedly due in part to shot convering).
<<Their basic premise is that the stocks with the biggest short % are being shorted for good reason and generally underperform.>>
This is where I believe they make their biggest mistake. Look at a stock like WDC that is on the list. Huge short position, great fundamentals, great shorterm/intermediate term earnings prospects, everyone knew a split was around the corner, trailing and forward looking P/E's well below the market average...etc. etc. etc..
IMO, a lot of stocks heavily shorted stocks (like WDC) are not done so for a good reason but simply because the stock has had a great run. Therefore, people assume that it is due for a pull-back regardless of its prospects, relative, or absolute value.
BTW, I have never had any respect for BearONS. Come to think of it, I have little respect for any of the industry rags especially when it comes to evaluating tech stocks. I would never buy a stock because it had a big short position. But I do love owning stocks which I believe are fundamentally undervalued and happen to have a large short postion.
BTW, I do believe that there will eventually be a short squeeze with respect to IOM. The short position is enormous. It may take several quarters or even more but eventually the earnings will drive the price of IOM. Worst case it that IOM will be bought out by a SEG, QNTM, WDC, etc. IMO, IOM's earnings and earnings growth are for real. I have followed this comapny closely for two years and have a lot of faith in Kim Edwards and his well documented strategy. By the end of the year I think you will be hard pressed to by a PC that doesn't come standard with a ZIP drive.
Regards,
FF |
