Slider,
As a fellow FGI zealot, I've also been trying to figure out the reason for the high short position. I was able to piece together the following data from a few different sites:
Month Shares Short (in millions) Price Range (9th–8th)
Jan 99 ----------2.637 ----------10.56 – 14.25
Dec 98 ---------2.818 ----------11.13 – 19.25
Nov 98 ---------3.006 ----------9.75 – 18.94
Oct 98 --------- 2.680 ----------10.25 – 18.00
Sep 98 ---------2.414 ----------10.25 – 20.13
Aug 98 ---------1.883 ----------17.13 – 27.50
Jul 98 -----------.992 ---------- 26.00 – 33.00
Jun 98 ----------.403 ---------- 30.75 – 44.00
May 98 ---------.559 ---------- 32.63 – 42.00
Apr 98 ----------.589 ---------- 23.75 – 34.00
I believe the short info is as of the 8th day of each month. With that being the case, approximately 900,000 shares were shorted between 9 Jul and 8 Aug. The share price during that time was between $17 and $27, averaging just over $23. (BTW, the highest volume day during that period (6 Aug) saw over 1.28 million shares trade between $17 and $18.75.) The next heaviest shorting period was the prior period, 8 Jun to 8 Jul, when 589,000 shares were shorted. The price during that time averaged in the high $20's.
This suggests a few things to me. First, since the bulk of the short position was taken over 6 months ago, I don't think it was done in anticipation of a disappointment in this earnings report. On the other hand, if it had been taken in anticipation of a weak 3rd quarter (which was reported in early Nov?), I would have expected covering following the report. This didn't happen. So, I think your hedge theory makes a lot of sense.
Your anticipated mini-pops at $18-$20 and $24-$26 correspond very well with the short positions accumulated in the low $20s (Jul-Aug) and high $20's (Jun-Jul), if the shorts choose to cover just prior to their original sell points.
Thanks for all the effort.
Best regards,
Mike
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