I have been researching OCZ all morning after accidently discovering it. I'm leaning toward investing some speculative dough Monday morning.
My question is, with all the positive messages on this board about OCZ, why is the short interest so blasted high?
I'm assuming hedge funds are short since the short position is so high.
This is my first message on the board. I've been impressed with what I have read here.
Impressed with a company that has been leaking money for over 10 years with no profits and just one of the pack competitively with an extremely unimpressve management team? Impressed with a company that diluted the crap out of its shareholders at 8.5 just to cover an already overly inflated nut, only to screw the shareholders and its investors as the stock plummeted? You ask why such a high short? Just think about it. Low 4s if you want to play the swings but this company's future is very uncertain and a very risky play at any price!
Joe and Stonefoxcapital pretty much call it as I see it. There's always been this lingering cloud of doubt that leadership hasn't ever been able to completely clear out. Some of this is their fault, some of this definitely is not. A lot of us here continue to think this is a good investment, even though the price action and a lot of posters here will tell you we're idiots. If you choose to invest, just don't do it excepting short term profits. They might happen, but based on the recent conference call it could be Christmas before the shorts gives in. Or they might find something new at that time and continue.
I think the short interest can be explained by a few things:
- Some people just don't like management, particularly Ryan Peterson.
- Copperfield hit piece last year marked the beginning of the short interest.
- Macro forces may have contributed to Algo's further shorting the stock during the Macro uncertainty of last summer.
- It's a "me too" short since the shorts must know something, right?
- Management was very clear with their OpEx forecasts in the past.
- Lots of competition in the space.
I'm also new to OCZ and have been doing a lot of reading (man, this is acronym hell).
With a very low outstanding share count and almost 50% short position, I am amazed that there are any shares available to borrow. Does anybody know what the brokers are charging to lend shares?
I agree with Joseph, but want to add:
The reasons for the high shorting are macroeconomic as well as company-specific.
In macroeconomic terms, there is a lot of uncertainty regarding the direction of the economy. Risk averse investors exit the market and prices in general fall. Even cash machines like aapl and lvs have declined more than 10% since their peaks in late March (and they beat expectations by far). That is also the result of the second round of quantitative easing ending in March, which inflated stock prices. A third round in June may reverse the trend again, as it happened in October/11. In the meantime, many unprofitable companies can go back to their levels pre-QE2, regardless of their prospects. Given those conditions, it is not surprising that the short percentage increased.
OCZ-specific: the Copperfield report, especially the 11th point regarding the non profitability of the company. I think that is the only point that really is still an issue. The rest of the bear thesis (poor management, incapacity to compete with the big players, suspicious growth outside the US, etc) has been disproved by the company's performance.
The argument is that OCZ "burns" cash. And the shorts got ammunition when the secondary went unexplained until the last CC. The big miss in earnings also reinforced that view, although the fundamentals are actually better than a year ago.
Absent a buyout, we will not get rid of the shorts any time soon. Those who cash profits will be replaced by more people shorting in every spike.
The short interest is there because OCZ isn't profitable yet. Long term, there's no doubt OCZ will do fantastically. Their management is aggressively growing the company, they're taking steps to significantly improve margins, and investing heavily in themselves.
And if they're ballsy enough to invest in themselves, I'm much more willing to invest in them.
Thanks. I have been very impressed with what has been shared on this board and other articles I have read. With such a high percent of short interest I'm assuming shares will gap in both directions. Weak hands add to the volatility.
I will be taking a position.