Sorry, guys, your 'death spiral' ain't gonna happen here.
Company announcing shipping under PO and this stock is off to the races. Anyone shorting into the teeth of that is going to get eaten alive.
Shorts are fools in this case, and are going to lose it. Big time.
BTW, FYI Mr. Epstein, Castle Creek is limited to max of 30,000 shares per day or 15% volume. If shorting, must be after uptick, so limits them even more. The only way the price would get down to where they could benefit is if individual stockholders get duped by anti-hypesters on the internet into thinking they should sell before hearing about a PO. Otherwise, you won't get the volume needed to start a selling landslide.
This time around, current investors are too knowledgeable about actual status, and near-term potentiality for stock to explode up once POs for volume shipment are announced. There will not be a panic selloff as in December when people misread the SEC filings which spoke of status that was 6 months old. And this time there are deep pockets definitely standing on the sidelines ready to pounce on any cheap shares offered up, because they know how close this company is. The Hanil announcement should not be underestimated. Nor the Financial Times article.
Castle Creek only holds 2.5M shares at $6.03 less interest, and warrants to purchase 900,000 at $6.78.
Truth is, doubt they're more than half the short position (almost 1.9M). And the 'floorless' option only pertains to 1.25M shares, convertible from preferred after July 27. They'd need to short it down to below $5.85/sh and get closing bid below that for 6 days out of 10 consecutive, JUST TO MATCH their current conversion rate. Only to the extent that the average closing bid for those 6 lowest days is below that amount could they accumulate more than their 1.25M shares. I posit that they'd burn through their whole collection of shares, trying to short the price and push it down, and for what? Just to increase the number of shares by 10 or 20%. C'mon guys, they're a hedge fund, they can do math. If they did that, by the time they got the price down there they'd only have a couple of hundred thousand shares left, having sold the rest (short). Fact is, they profit more by not shorting below $7 anymore (if they ever did, which I doubt).
They did their DD before they lent money, they passed up ample opportunity to short more last fall when there was more risk, and now that the execution risk is out of the company (by all accounts), they'd certainly make LOTS more profit by staying long.
The whole 'death spiral' scenario does not pertain to this company, this time around. It's a red herring being promoted by the shorts. |
