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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: IceShark who wrote (23658)	6/25/1999 1:34:00 PM
From: GVTucker	Read Replies (4) \| Respond to of 93625

RE: RMBS, short interest, and today's action Most people on the thread have noted the large drop in short interest on RMBS. I don't think you really realize what a potentially big deal this is. It is quite possible that a true short squeeze is going on. That happens very rarely; it is much more rare than most any individual investor realizes. I know; I was short Presstek 3 years ago when the stock soared to $200/share. There was never a short squeeze then. I never got my short shares called. This looks different to me. There are 23.31mm shares outstanding in RMBS. Subtract first the shares of management, 5.13mm shares. Those wouldn't be available to a short seller. The next part is guesswork, but I'm guessing that both Stuart Steele, a pretty savvy private investor, and Fidelity, who often plays games with short sellers, both are making their shares unavailable to short sellers. This takes an additional 3.88mm shares out of the float, leaving only 14.30mm total potential shares to borrow. If, say, Fred Alger, Morgan Stanley, Nicholas Appelgate, Wellington, and Paul Schupf smelled blood (quite possible), that would take an additional 2.59mm shares out of the float. Now we're down to 11.71mm shares. It wouldn't take much from there for someone to accumulate some shares, whether it is Vinik or someone else, and actually cause a squeeze. That probably began to happen last month, as short interest declined by a large amount. It may have been what pushed the stock price up to $100 over the past couple of days. Does this mean that the price is going to skyrocket now? Hardly, although it certainly could. It does mean that there's going to be even higher than normal volatility. For RMBS that's saying a lot. As I have typed this, the stock price has dropped $10. Moves like that could even be worse as this short squeeze even gets worse or unfolds. My best guess is that (particularly if somebody like Vinik is involved) the short squeeze will go away before the end of the quarter next week. Whoever is squeezing the shorts will not want to leave tracks, and a quarter end position would have to be reported, which would give the short squeezer away. It ain't gonna happen. This is one big reason why the stock didn't react at all to the DELL 'news' yesterday (although I am still wondering why neither DELL nor RMBS made an official press release). As I'm sure many of you know, this squeeze has nothing to do with the fundamentals of the company. If you're a long term holder, you'd best not watch the stock price for the next couple of weeks. If you're a trader, have fun, and be nimble.