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Cal-Maine Foods, Inc. Message Board

  • georgespelvin Jul 16, 2008 2:00 PM Flag

    Naked Shorting CALM - Schwab

    I just receivedat an overnight UPS package from Schwab asking me to lend my CALM shares to Schwab so they can be "used for various trading strategies". I called them at the number they cited (800-355-2448) and inquired. They told me they do not allow naked shorting and the demand for shorting CALM is so great that the cost to send this overnight package to everyone that has CALM is well worth the premium. I have owned heavily shorted shares before and have never received a request like this from Schwab. This package may reflect the SEC investigation into naked shorting because in the past Schwab has told me the only way I can be sure that Schwab does not arbitrarily take my shares is to take delivery of the shares. Perhaps they were doing that in the past and are afraid to do it now. I have owned stocks for 40 years and this package is a first.

    The price of eggs, which I guess can be viewed as a commodity, is a second order commodity, the price of which depends on, among other things, the price of the lower level commodities that create the cost of creation. As the cost of creation commodities fall, the price of eggs will be able to fall but this kind of thing usually has cost falling faster than the price so the margins actually increase by percentage. Oil could crash. The price of eggs, doubtful. And as the prices mitigate they will not be in sync with the fall of crude because that fall does not got factored into the produced petroleum products that create cost for CALM immediately. Further, eggs will never be as cheap as they were because they were a steal before on a dollars per protein unit basis. Further, eggs are easy and quick to use and just as they found that butter is better for you than margarine, eggs are no longer bad either. So I am long. Shorts and shorts brokers are desperately trying to get legal. I imagine there is a legal short squeeze about to happen as the nakeds scramble to cover. Naturally they will not be able to because their are more shorts than shares. That is why the premium is so high.

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