Hi, Jim
Count me in too – I expect to use some margin to make the squeeze that much tighter.
The rising level of short interest, though, does surprise me. If it is not in large part CC shorting against its options, then I have to presume that it consists of many small investors betting against Valence. If that is the case, I am surprised for two reasons.
First, it suggests a wider awareness of Valence than I would have expected. It is easy to see a handful of people shorting – amateurs and professionals alike – but harder to imagine that there are so many as to account for 1.8 million shares at a few thousand apiece!
Second, it strikes me as wildly reckless, given the very limited upside and the bottomless downside. One time, a few years ago, I got the idea of shorting Best Buy when the stock was around 9, its Christmas sales were weak, competition was cutthroat, and its shelves were beginning to look bare as if vendors were pulling back credit. The conventional wisdom of the Street was that Best Buy had expanded too quickly, and now was in big trouble. Fortunately, I floated the idea past my wise old broker who had been on Wall Street since 1927 (much to my regret, he retired May 1st after 72 years on the street – but he is 89 and I understood...). He gently dissuaded me, pointing out not only that the risks dwarfed the rewards (which I already understood), but that in his experience, often enough these things turn around. And sure enough, a few months later, it turned out that 9 was pretty much the bottom as the stock started up toward 30 and 40. He learnt me a lesson without me having to pay for it!
Anyway, I can't help but feel these shorts are investing far more recklessly than we longs...but hey, don't get me wrong -- I ain't complainin'...
Regards, lws
PS – John (Curtis): nice evaluation of things. |
