Bill, it is quite possible that you are right about VLNC and IMHO it may indeed collapse if they do not deliver a bonafide PO very soon. They have no money past the end of this month and the specter of the reinstitution of a floorless is not encouraging. On the other hand, if they have a PO exceeding $4 MM on hand, they can turn around very rapidly, this because the IDB is standing by to finance their working capital needs to the tune of some $40 MM if memory serves, and Berg has extended a line of credit (probably itself conditional on such a material event).
We had extensive discussions late last year on this thread (well it was mostly a one way street with the bulls attacking the messenger <G>), since the then existing floorless was going to hit if no material PO was in hand by the end of January. Well, somehow, management managed to persuade the holder of the potential floorless to remove that threat to a later date (July, I believe) causing quite a nice rally in the stock. That by itself indicates how the market is looking at stocks having financed their losses with floorless instruments.
Right now the technical picture indicates that there might be another delay in what seems to be an endless line of such delays, and thus, your short position might be vindicated. Just use some close stop losses, since, if by any chance they do get a substantial PO, this stock could spring and challenge the highs set late last year.
Good luck out there.
Zeev |
