There has been some discussion here as to why the stock is at a particular level. The short answer is that is a function of supply and demand, which is based on many factors. The price of a stock, and in particular WDC, does not reflect on the "goodness" or "badness" of a company. There are countless examples of stocks that grew many multiples after being discarded by the masses. The more informed buy these massive sales.
As someone who has worked on a derivatives trading desk, I can also share that a substantial number of purchases and sales are actually hedging transactions, with respect to some other instrument or instruments. Because of this, you can never assume the actual position of a buyer or a seller.
At the moment, the WDC/SNDK merger has some of the attributes of a convertible bond, and WDC can be a risk free short. The high WDC short interest reflects this activity, and these transactions will be unwound at some point in the near future.
But if you keep your eye on the ball, the company itself, and ignore the noise of the daily trading price, true rewards can be reaped. I truly love the level of fear in this stock, and all the naysayers. That, together with its true value, tells the complete story to the informed few. |
