My feelings about Shiva are similar.
I have to agree that the bulk of tax loss selling is done because daily trading volume is on the light side. The price is moving down
because there is no interest in this stock. In my opinion, the number
of sellers did not increase, it's the number of buyers that went down.
What I don't like is that the short interest for October went down from 3,986,866 to 3,809,218 (a decrease of 177,648 shares) and the price went lower. Of course, you can add a positive spin to this by
saying that short sellers feel that the stock is not going much lower
and they were covering their shorts. On the other hand, 177648 shares
is not a lot, and I may be paying too much attention to the decrease
in short interest. Short interest stil represents about 12% of all
outstanding shares, and any good news will force short sellers to cover their positions.
I agree that a new agreement with NT should be positive for Shiva.
In closing, I would like to list the things that are working in Shiva's favor along with the ones working against Shiva.
FOR: 1. A new NT agreement is due soon
2. New management
3. A large short interest
4. Good products
5. A tax loss selling season is almost over
6. Management has a lot of stock options
7. How much worse can things get ???
8. No debt
9. Approximately $3 per share in cash
AGAINST: 1. Communications sector is in a bear market
2. Too much dependence on Nortel. What if the new agreement
is not better or even worse than the current one? What
if the relationship with Nortel ends?
3. Lack of following by analysts (easy to understand !)
4. What if we are entering a bear market? (eventually, there will be one)
5. Strong competition.
I am sure I missed a lot of other good ones.
Ed
P.S. I intend to stick for about 6 more months and give the management a chance before I bail out.
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