With all the recpect to the good Dr. - what drives the shorts?
I do agree with the things most of the ppl here say about the positive outlook of the Dr.'s percheses.
What I don't understand is the thougt that drives short sellers to sell a 4$ stock with 1.3B$ MC when there is a well known "know how" owner how puts 250K$ EVERY DAY into the stock.
Who takes the risk going against the landlord??? and why...
My take is that fund manager's look at small biotech companies as huge gambles- where more end up failing than making it. And when i mean fail- I mean total kaput! So if you take an industry with an 85% fail rate you can short all stocks and probably make money which is why most small to small mid cap biotechs have large short interests. Plus they make good pairs trades with other stocks with competing interests.
In a nutshell- OPK has an extremely high Price to Sales Ratio of 40.77 (market cap/annual sale rev). which is an indicator that the stock is grossly overpriced. Just to give you and idea- Facebook (FB) has a P/S ratio of around 10 and is still heavily shorted. At a P/S of 40- it looks on the surface to be a no brainer to short.
What people don't factor in is that Opko is essentially an R&D medical/healthcare venture capitalist or a medical holding company. They are taking company's/products that they believe will be extremely successful in the future. As such, their annual revenues are limited at this point but could explode if some/any of their holdings product significant results. They have a healthy cash flow and minimal burn rate of cash- so IMHO they can be in it for the long haul.
In summary- it all boils down to how successful OPKO is with the investments they move forward with. Dr. Frost has proven that he has done this on several occassions and the fact he is putting a significant amount of his own cash leads me to believe he is confident in his/OPKO's future.
In a nutshell, that's one of the reasons that OPK is one of the LARGEST SHORT TRAPS AROUND.:)
It is becoming harder to borrow shares for "shorting".
I have two brokers in the last week calling to offer paying a pretty good "interest", if I agree to let them borrow my OPK shares, so they could be used to lend them for "shorting".
Quarter results are due on Monday.
In the June Q the Top Line increased 16.34% sequentially, and it should grow at a faster rate with the new PSA test now available in Europe.
The application to the FDA for the the PSA in the U.S is due to come out at any time.
News on the PIII on Rolapitant should be available in the 1st Q of 2013
And any other "news" on any of the others OPKO's "IRONS on the FIRE" could come out unexpectedly, which could trigger a SHORT SQUEEZE. :)
Hey, some great questions my foreign friend. BTW, there is a totally delectable fish called the "perch" typically found in cooler fresh waters. The plural of "perch," however is, well, PERCH. Not even Canucks would use the word "perches." And the double plural "percheses" is waaay beyond internaltionally recognized acceptable standards. I'm pretty sure you meant to type "purchases." :-)
So, getting on to the meat of your question, machines only do what they are told to do. I think you would have to ask Morgan Stanley why they have programmed their machines thusly.
Meanwhile, the doc and others are appreciative of the opportunity to buy at lower prices. Somebody on one side of this equation is going to be massively wrong. The other side is going to be massively right. While Frost and OPK is, perhaps, a little stingy with news (and particulars where there is news), I'd suggest thinking of this as a poker game. And somewhere in the distant past, I recall reading a "color piece" that mentioned Frost is a seasoned poker player (when he is not doing corporate deals, managing companies, chairing board meetings, etc). The shorts short biotech stocks b/c most of them fail.
In the grand scheme of things, their successes might negate their failures. I think that is overly sloppy thinking, but then I don't swing as big a stick as say, Morgan Stanley. So, maybe they'll get by. But for my part, I'm sticking with the the favorite in this race. Besides, JPM fired the London Whale and is now suing his boss. Just b/c you are BIG and have a lot of OPM doesn't mean you are smarter than another INDIVIDUAL who is also very BIG. It only means you are BIG (as in BLOATED and INEFFICIENT).
Well, if you get a chance, you really ought to try some fried perch. Delicious!