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Biotech / Medical : GUMM - Eliminate the Common Cold
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To: Mike M who wrote (3860)6/3/2001 10:09:18 PM
From: Kevin Podsiadlik  Read Replies (1) of 5582
 
No doubt that there is little reason to be short a stock that is trading at $7.44 when Wrigley is about to pay them $3 a share for their money losing operation.

And yet, if shorts were truly worried about this development one would think the stock would be drifting upwards rather than downwards.

I'm sure the reduction in short interest is partially explained by anticipation that the GUMM PR machine is not likely to remain silent forever. On the other hand, GUMM is hanging around near its lows, meaning that most short positions in this stock are profitable. Given how rough short sellers have generally had it for the past two months, there's no doubt been more that a little temptation to take money off the table here lest the mania of the market infect this stock.

If the short interest loses their ability to contain the rallies then a short squeeze is entirely possible.

I'm not sure I'm grasping this concept of "short interest containing rallies". Say stock BCD has 2% of its float shorted, and stock WXY has 20% of its float shorted, and both short positions have been in place and relatively stable for some time. Are you saying, then, that BCD is likely to rally more strongly on good news than WXY because any rally WXY attempts will be somehow "contained" by its high short interest? That's certainly contrary to conventional wisdom, or at least what passes for it on the message boards.
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