James:
I'm just learning about the fine art of shorting, and I have been perplexed by the idea that anyone would be shorting this stock at the current levels. However, if this is the case, I do think that those involved think that strong upside movement is not likely in the immediate future. And they may be right. I'm not making any predictions, but I have argued in the past that we may not see any strong, sustained price increases until something fundamentally changes with the company. By that, I mean some very tangible evidence that revenues are strongly increasing, that a strategic consolidation is taking place within the company and that this is all being done without giving away the farm.
While the recent news seems very good, it does still not fall into my interpretation of "tangible results". When some of these deals start to close, then we will have some evidence to point at that should strengthen the bottom line. But, in light of the World Pass deal falling through recently, it seems likely that some investors (or potential investors) may feel uncertain about the ability of DCI to achieve their goal.
I'm not saying that I think DCI is in trouble. On the contrary, I remain a long-term shareholder, and I believe that we will cross the finish line this year. I'm just giving my assessment of why (at least in part) we may be seeing the price action that has become pretty normal lately. I think that "nervous" investors are the ones who will end up being the big losers over time, because they tend to be very vulnerable to rumors and constantly change their minds about the prospects for DCI. That's a very dangerous strategy for this kind of stock as they are so prone to irrational behavior. If people are shorting the stock, they are doing on the backs of these "nervous" investors. Ultimately, the only thing that matters is whether or not I believe that DCI management can achieve their stated goal. I have recently gotten over one hurdle in my own mind, that has to do with the integrity and commitment of Joe Murphy and crew. I am convinced he is who he says he is, and that he is committed to doing what he said he will do. The next hurdle (for me at least) has to do with whether I think he/they can actually pull it off. At this point, I am betting that he can. But my confidence will be bolstered as some of these pieces begin to fall into place. For now, I believe that they are on the right track, so I will sit and wait. And I won't be surprised if we continue in this up and down pattern in a narrow range for awhile yet, but when the pieces do begin to fall into place I would then expect to see some changes in the price action. Anyway, that's my take.
PA |
