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Technology Stocks : Ultratech Stepper
UTEK 30.230.0%Jun 5 5:00 PM EST
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To: Boca_PETE who wrote (1943)12/26/1997 9:20:00 PM
From: Justa Werkenstiff  Read Replies (2) of 3696
 
Pete: Conventional wisdom has it that a high short interest should be viewed as a negative indicator that suggests the stock will fall in price. The equally conventional contrarian position would seem to be that a high short interest indicates a potential explosion to the upside because those shorts must cover at some point.

In the final analysis, the company's fundamentals will determine which course the company will follow. If the company has been misjudged by the shorts, a nice squeeze could be the result. If the company really does suck, then shorts will be covering at lower prices and will not create any upward momentum to offset selling investors.

I always respect Mr. Short and try to guess why he is playing his hand. I think there may be two explanations: (1) Ultrabeam and P-Gild are viewed as pipe dreams to be pushed-out or threatened because of the SEA turmoil or because they are not really viable or because nobody cares about 1999 today; and/or (2) the DRAM business and TFH business are in the crapper or will be at some point in the immediate future due to oversupply and declining prices such that equipment purchases in these two major revenue generators for the business plan (at this point) are threatened. I do not buy into #1 myself; however, #2 seems a plausible occurrence in the short term. I expect that if UTEK misses its number at the end of January and offers poor visibility, Mr. Short is hopeful that UTEK goes the way of FSII this past week.
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