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SUPERVALU Inc. Message Board

  • salmon_the_man salmon_the_man Feb 8, 2013 11:30 AM Flag

    Perfect storm is forming for shorts, they will be sqeezed very hard

    Over 85 MM shares of shorts need 85 MM shares leverage to prevent naked shorting. Cerberus is also buying 64 MM shares and most institutions with cost above $4 are holding about 200 MM.
    Where do brokerages come up with 85 MM shares to support the short positions?
    Most sjorts are forced to cover and that will push the price much above $4 (short sqeeze).
    We will see the sign of that by next week.

    Sentiment: Strong Buy

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    • I wonder why short interest did not go down by Jan 15. That means shorts did not believe the deal will go thru. However, after the official tender announcement, the pice jumped to $3.90 from $3.50 with higher volume. That was the first batch of the shorts who covered and probably lost some money.
      The second wave of short covering may happen by next 2 weeks. The problem is the volume that cannot support huge short covering and the stock may hit $4 or higher before the tender expiration.
      Well, setting a strategy is important here and some investors may benefit accordingly.
      At $3.85, the yield is almost 4% for next 2 week. Not a bad deal.

 
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