FWIW, I think that the negative effect of bondholders shorting the stock has finally "played out". My theory goes like this:
1. The valuation of the company float immediately before Needham was
$47x6m =282m. This number reflected the market perceived value
of shares available for trade. Let us assume for the sake of argument that this value would have declined by 30% - in line with AMAT, EGLS and other semi stocks. Without Needham, the stock would probably trade around $32 now - maybe more, maybe less. The value of the company float would without Needham would be now roughly $32x6m = $192m
2 After Needham, 2m to 3.5m shares were shorted against the debentures. This increased the "effective float" from 6m to 8m-9.5m,
let us say 9m, and it will stay this way until bondholders decide to that it is time to cover. Turns out, nothing is fundamentally wrong with the company, thus the value of the float should stay the same -around $192m.
3. With 9m shares effective float this corresponds to 192m$/9=$21+ per share, which is roughly where we are now. The stock price decline had finally absorbed the effect of shorting!
4. Now that CYMER stock price has finally absorbed the increase in
the float, it will trade in line with the sector as a whole.
Today CYMI performed in line with sector - INTC and AMAT were down.
5. Once the semi sector starts rebounding, shorts will start covering, the effective float will decline and we'll see CYMI
stock moving up faster and faster.
Guess you've been telling this all along....
Regards,
Y. |
