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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Roger A. Babb who wrote (13219)8/28/1998 12:48:00 PM
From: Al Chechatka  Read Replies (1) of 18691
 
Roger,

I have been watching CLCX go down from 20 to 5 this month. I was long this stock because I believed it really had a great market. Good earnings, lawsuit settled with AG in CLCX's favor, and education growth rate because of Federal Money from Bill Clinton.

They had a shareholders lawsuit that dropped the stock from the low 20's down to 13 or so. I still feel that it has no substance, and was filed 3 months after the findings were found.

The short interest was huge ... over 8 million. The total number of shares was 17 million and only I believe 7 million were not held by insiders (I'm not positive on the 7 million part) So almost all shares were short.

Eventhough I thought the lawsuit was frivolous, and the company would bounce from 12 back to 20, I was scared of that short interest. 1) Should that have been a huge red flag that there was so much short interest with this stock? 2) Will they cover now that the stock has gone down 75% or will most ride it even further. 3) With that much short interest, have you ever seen it burn the shorts. 4) Could the shorts have manipulated the stock from 20 to 13 with the lawsuit (today's drop was due to lower earnings and had no caused by the shorts).

I am still long the company, but I have never seen so much short interest in a stock and I should have gotten out much sooner. I wish I would have told you about this company sooner so I could have possibly taken your advice and maybe you could have profited.

Thanks in advance,

Al C.
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