Larry:
With respect to large short positions, historically they have always represented an excellent statistical bet. Only amateurs bet on the buying power of a big short position or a short squeeze to provide higher prices. Shorts are primarily pros, and they always conduct intensive research. A building short position usually evidences increasing conviction that a stock is dead meat.
MU is just that...dead meat. Aside from the fact that their products are pure "commodity", losses are accelerating, interest expenses are mounting, inventories are bloated, amortization schedules are semi criminal (and must soon be addressed), writedowns loom, assets are declining, and the competition is massive. Add to that the fact that most memory ends up in a PC, and that the PC market is in trouble, then factor in a near term cross-over to 64 Mbit, where the competition has advantages, and a short position in MU takes on the characteristics of an annuity.
I suggested a bit of patience at Christmas. Now I see little risk in shorting this stock. A large short position will prove inconsequential when the dumping commences.
Best, Earlie |
