descendantofzeus: "while I'm long, I consider this stock over-valued here, and have sold a few calls; but I would not bet on it going down when there are so many shares that must be bought back - and probably will be bought at higher and higher prices "
Good, an honest long. Now, regarding the short interest... I've seen stocks with far more shares short that eventually crash, best example is PALM. Unless there is a big announcement that triggers a short-squeeze, there is no immediate hurry to cover shares short, you can have the shares for years, if not forever. Also, remember that if/when the stock price goes up, sure, some shorts cover, but others step in to short more.
I think both shorts and longs are correct and wrong about KKD. It is overvalued, but this does not matter if there are enough buyers. You can be right all along, but in the stock market what matters is what the majority think. Eventually KKD will go down, but in the meantime longs are enjoying healthy profits. KKD is a Wall Street darling right now, but this won't last forever. Sooner or later, all darlings have their very bad moments. Remember some stocks like COMS, PSFT, CMPQ that were Wall Street darlings for many, many years, and look where they are right now (Compaq was bought by HP, but the price when it last traded was far, far away from its all-time high price).